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sessions around the country, and in the survey, the regulatory burdens and the uncertainty surrounding these new regulations were repeatedly cited as the major reason not to expand our payroll. i do not think our friend from maryland is going to expand his either with an $800,000 increase in his unemployment expenses. can you blame these businesses? these there are hundreds of major new rules in the pipeline generated by the health care along -- law, dodd-frank, changing how
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companies are going to have to operate, and especially what the epa is doing to drive up costs that will not help us create jobs. we are not against regulations. , but the combined weight of all these new regulatory activities is something we have never seen before in this country. it is unjustified and done called for in a free society and a free economy. it is killing american jobs. we need to fundamentally rethink our regulatory system. for one thing, congress has ceded it to and on what did fourth branch of this government, the regulatory agencies. before a new major underlying
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regulation takes effect, congress should have an up or down vote. after regulation costs $500 billion or whatever, they ought to have to voted up or down with their name. there should be a stronger burden of proof placed on the regulators to show that the rules they are proposing are sound, justified, and reasonable. in addition, one major factor cobbling the recovery is the ability to build anything anywhere in a timely basis. by reforming the permitting process, we can start generating new economic activity now faster than we could under the old system. how'd we do that? most environmental
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reviews to six months and. that is ample time for a review of most projects. if experts to not believe they will have any significant impact, let us speed it through. if the state has already done a successful review, why do it twice when the review involves more than one entity, so the administration should require the designation of a lead agencies of this can get done quickly. as jeff immelt has noted in the preliminary analysis of his counsel, and they need speed and clarity. if you want job creation, leave it alone. tell them yes or no, but give them a timely answer. we then come to raise serious
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questions holding many, many companies, large and small, domestic and international back from putting more money in this economy. that immediate challenge facing our economy is the debt ceiling and deficit. is the question of what this does to affect our ability to create jobs. i will now make a comment that some may not like. they may not believe or want to hear, but congress needs to raise the debt ceiling and must do so without delay. it is an unfortunate reality, but it must agree done. failure to do so would have grave consequences for main street businesses and for every family in this country. it would drive up interest rates. it would drive the markets down.
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the dollar and our economy would go down and it would take today's economic uncertainty and expanded to destructive levels. investors will turn away from the united states and take their job-creating capital with them. we are calling upon the leaders of both parties to make tough choices and to come to closure of. they need to agreed on a plan now to raise the debt ceiling and agree on a plan that controls our deficits and debt levels going forward. this requires, first and foremost, major spending cuts in entitlement reform. but following the approach as i have suggested, government can also generate a lot of new revenue, not by raising tax rates but by spurring growth, creating more and more taxpayers, and by crude in
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developing our natural resources. let me recap. we can help spur growth and create jobs in the near term by expanding trade, tourism, infrastructure, and energy by fixing the housing sector, by reforming regulations in the permitting process and by raising the debt levels while also cutting government spending to reduce uncertainty and put our nation back on the road to fiscal responsibility. these are important and urgent priorities, but we must also embrace a long-term agenda to ensure america's growth, its competitiveness, and its prosperity. time does not permit me, and your patience will not allow me, to discuss all of the elements of this broader agenda, but clearly we need to develop and
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attract the world's best talent. we must maintain our unsurpassed leadership in education while reforming k-12 schools and strengthening our vocational and technical schools. we need comprehensive reform that is humane, efficient, and economically smart. we need to carefully example our workforce means at all skill levels and did just the be set and immigration programs. we need to make it easier for the best and brightest to study and train and be allowed to stay here. this is important. if they cannot find the talents in america, they will have to send the work to where the talent presides. our nation must also remain the
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global leader in science, research, and innovation. it is one of the reasons we need those very smart people. we need the most effective patent system in the world. there is very good legislation pending right now, and we have to get it done. we must have strong intellectual property protection, the cornerstone for innovation. intellectual property is protected more in the u.s. than elsewhere. the money, the people, and the jobs will come here. alongside talent, there is a need for capital to create new industries. we have the most vibrant capital market in the world historic play.
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these markets breathed life and success and to ideas come innovation, and reasonable risks of entrepreneurs and businesses to be successful. i can assure you that the chamber is working every day on efforts to fix our schools, to reform immigration and visa rules, to strengthen patents and intellectual property rights as well as our legal system and repair the excesses of the dodd frank bell -- bill to improve our capital markets. the same must be said for health care for the exploding number of regulations needs to be dealt with. we still must find genuine solutions to all of these costs, separate out the regulations that are really needed from the ones that are causing a stop to
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create jobs. ladies and gentleman, nothing is more important to america and the american dream than creating american jobs. despite all of the bad economic news we have had and all the uncertainties that cause us to question the future, we must not, we cannot get discouraged. we must not indulge in despair. we can create american jobs if we remember who we are and what made our nation successful in the past. it is not about bigger government dividing up an existing economic pie but a free enterprise system that creates a bigger pie with more opportunities for all of our citizens. government does have a role to play. of course, we need them to make sure that the rules are clear, fair, and that our economic fundamentals of the best in the
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world. today, in addition to fixing these fundamentals, the most important role the government can play is to remove the impediments and uncertainty that have slowed our growth and shackled job creation. by unleashing economic growth and freeing our job readers to do what they do best, we can and will put americans back to work. these are clearly challenging times, but there is no problem facing us that does not have a solution. the answers are clearly not clear and easy, but there are answers and they are almost always made in america. we have so much going for us with a strong demographics, abundant natural resources, the world's most productive workers , an unquenchable thirst for entrepreneurship, and a long history of kicking ourselves up
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when people think we are really down. one of the people we spoke to during our tour was a young man who created his first company at the ripe old age of 13. enrico went on to create two more businesses and today he is the co-founder of a company that specializes in lighting efficiency. he still has a few years until his 25th birthday. that is the spirit of entrepreneurship that makes america's successful. those were the ages of the people that are celebrated in this room that led to the founding of this country and great economy. that is the spirit of enterprise that makes americans successfully and unique. as long as america welcomes and encourages entrepreneurs and as long as we can continue to stand up for the principles of free enterprise, limited government,
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and as long as we will reward rather than punish the dreamers, dewars, risktakers, and those who have the most significant success, we will always come out on top. that is something to think about, but a long road to be there. thank you for coming. thank you for your patience. please listen carefully to those here today and go out and put on the heat. the heat is simple. let's do it now. let's do this in an orderly way. let's not wait for someone else to do it to us and i thank you very much. [applause] >> ladies and gentlemen, please welcome bill miller, senior vice president and national political director for the u.s. chamber of commerce.
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>> good afternoon. it is a great privilege to follow, and talk about the prospective of jobs. the sign behind me, "dream big," is appropriate as we begin to discuss these great optimists. they truly are the great optimists in america. what we will talk about today, what are survey has shown is that there is a lot of uncertainty out there. they're people believe the u.s. economy is on the wrong track. there are people who think there are policies that come out of washington and other places that are the wrong way to go. the one thing you'll hear from the people appear today, and the one thing we heard during the listening session, multiple sessions of the country and in
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every state, is that when you talk to small businesses and you talk to the people really living the american dream, they are optimistic about their future. it is a pleasure for me to moderate this panel and talk about what we have found as we work through a poll that is the second quarterly poll we have done here at the chamber. what i will do is introduce you to 3 panelist on the stage with me and began a discussion about it. first, i would like to introduce the president and ceo of the misery chamber of commerce who oversees the largest business association representing 425 employees. dan has been a great me hand on behalf of the business community and has been very successful in pushing pro- business career pro-free
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enterprise solutions. next we have adjusted johnson from bronx new york. which worksjohnson for a family owned it security company. her story is different. she will talk about the challenges that face her business, but she has been successful in the last year and doubling the size of her business in terms of contract and revenue. she is a graduate of the goldman sachs 10,000 small business institute and believes very strongly in mentoring in terms of access to capital and a great understanding of that. finally, the panelists who will follow me is carol sue haney from harris interactive.
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she manages qualitative and quantitative research as well as providing thought leadership in the social media and research space. harris interactive is one of the largest market research firms and she will kick off our panel by giving a short presentation on the results of our poll. as i said, the second poll that i did over the last two quarters, we surveyed 1400 small businesses to check on their pulse. compared to the first quarter, i will give you the top line. there is a high degree of uncertainty in, a strong belief that the american economy is on the wrong track. to the point that i made when i began this discussion committees are optimists to their core and i think carol will have some very interesting observations. carol?
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>> hello, everyone. harrisol haney from interactive and i will go through the results. we just finished at the end of june, so this is hot off of the presses. we did this study on behalf of the national chamber of commerce. this survey is quarterly and it is on-line gathering opinions about the political environment relating to small business. on we also gather behavioral data about hiring, decision making, and business forecasting. we exclusively survey the small business owners and executives we interviewed 1400 respondents who fell into this category. the sample site is representative of a chamber of
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commerce members and non-chamber members. businesses where the annual income is $25 million or less are considered small business. look at opinions about the current business environment. we measured on three different levels, the u.s. economy, the response to the local economy, and their own business. for example, we ask if whether the u.s. economy was headed in the right direction or seriously off the wrong track. 84% indicated the u.s. economy is on the wrong track. slightly more optimistic about their own local economies, 54% say their local economy is on the wrong track. that is a three. decrease from last quarter.
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-- a 3 point decress. 66% say their business is on the right track. this is dominated by economic uncertainty, ranked as the most important challenge facing small business owners with 49% raking -- ranking economic uncertainty as a top three choices. they also feel challenged by the national debt, the new health care law, and the impact of regulations. the number of challenges and had to choose from work 14 across a range of economic and political challenges, and note there is some seasonality. in the first quarter, the category of high taxes was higher on the list as a more important challenge, however economic uncertainty remained the same level for both quarters.
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to give details on the uncertainty, we asked opinions on two measurement points. uncertainty about, when asked about which issues they felt the most uncertain about, 46% say the federal debt and deficit is causing uncertainty and 35% say it regulation is causing the most uncertainty. in terms of a threat to business, when choosing from these, respondents think regulation is the greatest threat followed by 35% who think taxes goes the greatest threat to their business, with 18%. when asked if their own businesses best days are ahead or behind them, 39% say their best days are ahead of them.
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38% ron short, a drop of 10 percentage points. -- 38% were unsure. only 39% felt america's best days were behind us. when looking at what small businesses need become a 15% say they believe washington should offer a helping hand. the vast majority says washington should get out of the way, 79%. when respondents were asked which two things would help small businesses more, 85% same it would rather washington provide more certainty than offer more assistance. it is no surprise that hiring is at a standstill with respondents not hiring over the next year and only 19% planning to hire.
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from the choice of seven factors, respondents said economic uncertainty was the greatest obstacle to hiring more employees. respondents chose that for their top two. the lack of sales followed with 34% think it was their greatest obstacle. on the upside, a 12% said they would lose employees over the next year, which is a marked improvement from the 29% who said they lost employees last year. when total that america barrault's $4.50 billion per day to cover the budget shortfall, 80% of small-business owners say debt and deficit potentially pose a threat to their business either immediately or long term. conversely, 19% do not consider the current debt situation a
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risk, now or later. nearly four out of five small business owners believe federal regulations are at least somewhat unreasonable. from last quarter survey, this has increased 4%. this opinion is staying steady with a slight uptick in to dissatisfaction. we did not ask which specific regulations were problematic, but we saw the most dissatisfaction in health care, manufacturing, and financial service sectors. when coupling regulations with restrictions and taxes, 85% of business owners say they are somewhat or very worried about the impact of these three things on the businesses.
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drilling down into the impact of these obstacles to hiring more employees, on a light-dislike- agree scale, they at least someone agreed to the statement that taxation and regulation from washington makes it harder for their businesses to hire more employees. 75% of respondents felt the recent health care law will make it harder to hire more employees. to recap, economic uncertainty is the headliner in this quarter survey. this pessimistic view of the u.s. economy-leave effects the small business outlook. most small businesses, 80%, are planning to not hire new employees in the new year. the top three obstacles were future hiring include economic uncertainty in, lack of sales,
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and uncertainty of plans from washington. almost 80% agree that legislation makes it harder to hire employees and 75% see the recent health care law as an obstacle. 79% believe washington should get out of the way of small businesses instead of offering a helping hand. thank you very much. i look forward to the upcoming panel discussion. [applause] >> maybe you can shed light on this, dan, but what do you see when you talk to your members in missouri? what about the issues of access
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to capital? we have seen a recent citings talking about the number of loans a decrease in the small- business is by about 8%-9%. nationally, this is something that i think continues to be an overhang for small businesses to overcome, but i would love to have your perspective. >> when i met carol, i told her that i had read the data a few days ago and this is exactly what we are seeing with our members in missouri. every now and then, you are ahead of the curve. we had been hearing the word "uncertainty" in the last 18-24 months, but it has evolved into a lack of confidence. we see problems recurring but no
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resolution of these issues. look at the budget, deficit, etc.. this is the lack of confidence in the system and that uncertainty is saying, "what are they going to do to me next?" for a small business, get out of my pocket and get out of my way. i know what i am going to do here. with the question of financing, there has become a hyper- conservatism whether that is due to the regulatory environment or just cautiousness. the same fear of stepping down remains to be debated, but it is inverted right now. if you do not need money, it is there for you, but if you may need money to make that next step, the paperwork, the time, what you need put up as collateral, it becomes that much more difficult to attain. it seems like the new
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discoveries out there, the things that we depend on from an entrepreneurial perspective, you need to have that business plan that is off the chart successful and will follow the hockey stick curve a dubious -- better be able to justify or the financing will not be there. it is dry. at a time when we do not need that, i think perhaps a resolution of the debt ceiling issue or some "progress" moving ahead may help. when you look at our members, you have a budget. we have not had one as a nation in two years which reads the lack of confidence and ill feeling toward the political landscape whether they have an "r" or "d" next to their name. >> you inherited challenging
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situation. can you talk a little bit about the situation that you found yourself in and how you have been successful? >> one word that would describe the situation is definitely uncertainty. my brother and i lost her father after battling cancer in 2008. we thought we would have several months to work with him and learned the inner workings of the business. we had no idea of what the situation, what dire situation johnson security was in. we were losing clients, clients in significant our readers. we have some employees that were so strapped for cash that they would work all time from us while working full-time for other employers. how do managers someone working 80 + hours per week? our building was falling into disrepair and potential clients were taking longer to award
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contracts. we had fallen into a rut which was not familiar territory for our business. next year, we will celebrate our 50th year in business and we have had different cycles. to be stuck in 2008 which almost -- with only 16 employees, it was dire times. i needed help and i reached out to our local chamber, the small business development centers, and was fortunate enough to come across the 10,000 small-business initiative under the direction of goldman sachs. we worked with local community colleges that provided us with business support services and networking opportunities with other small-business owners and showed us some alternative routes to financing and help us stabilize our operations until we could reach the point where we are at now.
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you mentioned are double our employee base and contracts, but we just added an additional 20 jobs over the last month, so we have seen a meteoric increase as a result of the lessons from 10,000 small businesses and putting the passion in some of the things our father was not able to do back in our place of business. >> that is exciting. carol, we spoke about the issues and were different things rank. one of the things that i was surprised about is, i think small businesses and the debate in washington over this and that, at the opposite, and where we go as a country has really extremely moved that issue up with regards to how important it is to small-business is who will typically spend their time
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thinking where they go to get customers come increase revenue, and how did they keep them happy? yet, we now have regulation, and debt, and the opposite ranking had of a lack of sales and revenue. to me, i think that is remarkable. could you comment? >> it is the economic uncertainty that we are seeing, almost 50%, as the top concern. it encapsulates all of those items. one of the things you're talking about was a lack of credit. it is in the top 10 and we reported only at the top five in the presentation, but it still remains in the top 10 and it is something small businesses are concerned about. i think it is also the lack of credit coupled with the rankings
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with economic uncertainty. >> everybody watches the fight in the hockey game. you may not see the passing before the goal, but when there is a fight, everyone will watch when they drop their gloves. every week, we have renewal calls and i get packets' like this that have answers on a verbatim question. bill is asking for real stories about what is going on out there. this one will sum it all up. there are a lot of themes in carol's survey. here is a box company that employs about 150 people in st. louis. "we need things now. if government leaders do not come together soon, we will not have to worry about life as we know it. i keep hearing that businesses are making record profits, keeping money, and not hiring.
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media and others in the national scene and/or our players continue to vilify those who get results for the economy. this needs to stop. it hurts many things, drive wedges in relationships with our employees, which affects productivity which adds to a decline in business competitiveness and a mess of dissatisfaction and in the workplace. i only know business people that are losing everything and closing their doors or, at best, fighting to survive as we are. we have been battling hard since 2008. we went through a lot of pain and restructuring to get back to a bottom line and business has gotten worse since last october and again in may. enough of this. time to get back to work. thank you for your efforts." he identifies that what is going on in the media, they are looking for that conflict they
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can report on which only exacerbates, i think, some of the trends we see with uncertainty and dissatisfaction. let's get real. the people producing jobs do not want to hear about who said what at a press conference today. they want results. the side show in washington is really getting to them right now. >> let's follow that for a moment and talk about the states. they have always been laboratories for the types of innovation necessary. sometimes it is not the washington solution, but in the states. from where you sit, and it can be just a missouri-is this a good, or take a look at other states -- missouri, specifically. but what is going on?
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>> we have had tort reform, work comp reform, and incentives. one thing we are doing is we're trying to locate an international air cargo hub. american airlines pulled out and we have a brand new runway going unused. we have space. we have a facility vacated by boeing which can fit two 747 freighters. we have better weather than chicago. we have really pulled together as a state. it would be great for st. louis, great for missouri. we lost that 100 years ago when we didn't do it for the railroads, so we don't want to
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lose this now when we have a history of shooting ourselves in the foot and reloading. i sold our board on it, which has been easy to do. it's a heavy time commitment but it is "dream big" and show leadership to look down the field. air cargo hub with china, brazil will come. it will be wonderful for the future. we are right in the middle of the country. no one can take the location from you. we should drive as a logistics' center.
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it has been a rare coming together of business, labour, city, county, state. we have had great support from our bipartisan congressional delegation. those kinds of things did not happen too often. hopefully we will be able to drive that home. >> jessica, as you look forward, and you have been able to come into a challenging situation, do very well, but as you look at the implementation of a number of these big legislative issues, whether it be in the financial services brown, health care, and the other challenges that exist, where do you see the biggest challenges and then where do you see your growth? >> the biggest challenges are in finding the time, resources, and talent to manage the regulations that apply to your industry.
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there is an appreciable amount regarding the licensing for firms, equipment, so learning what those regulations were and making sure we were compliant, that was one set of challenges. another large area of regulation is unemployment insurance in that segment. our service is our employees. we spend a lot of time and resources dealing with unemployment issues. one particular issue where we have to deal with this is with osha under the department of labour. a lot of our growth has come in construction jobs. the requirement on any construction job in new york is you have a minimum 10-hour ago shut training. as a security provider -- 10- hour osha training.
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as a security provider, we have to decide if we bear the burden of the cost which can start at $100. when we look at our candidates, they have been unemployed and can barely keep their cell phone on the. they cannot pay $40 for their phone and led a long $100 for the class. do we bear that cost or do we screen for people to make sure we have people that have the training to compete with those contracts. those are a few of the regulatory challenges that we face. what is most important is understanding the regulation applicable to your firm and industry and finding the time and resources. outside of payroll, the majority of my time and resources are spent on insurance, which is required, unemployment, and on
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accountants to make sure we are compliant with the tax code. it is a necessary evil, but it is making sure you do what is important. >> as the survey showed, regulation, there are certainly some good, important regulations, but there is pretty strong sentiment that suggests there's too much of it. what are the things you have seen among larger businesses with increased productivity, better earnings, a pretty strong stockmarkets generally, and a lot of those fans have not come from increasing the number of workers. i am directing this to you, carol, but i open this up. is there a worry when we ask these small business owners and
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they say they are not planning to hire, 64% say they are not planning to hire any additional people. i do not mean this to be leading, are they saying that because we are grinding out increased productivity because we are taking the same approach that the larger died -- larger guys are? >> in addition to not hiring new workers, 15% are letting workers go. really, we are talking about nearly 80% of small-business is that will not be doing any hiring or do not have it within their plans. that is really significant. they're going back to squeeze, obviously, out of their current employee base. >> we see that, as well. there is a reorganization and
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you do hear stories like this. congratulations to you and your success. you do hear some people are growing, but in general, there is just a pullback, a cautiousness that, for reasons we have already cited, the people that would be hiring are not getting around that obstacle. i guess it is more reorganization and a rethinking your structure right now in trying to make the best of it. we have seen an uptick of arms emerging and things like that. there is a combination of that, but they are still on the sidelines. >> there was a point when we were a lot more conservative about hiring and we were offering employees overtime instead of taking the risks of finding new employees. what we found is that we could not continue to afford to do that. it made more sense for us to hire more employees. if they had to take unemployment, what would that
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cost as opposed to a burning out our employees, not giving the service we want, or potentially losing a client because we do not have the manpower to service their needs. >> people doing more with less, trying to get by. >> energy prices. we have not really talked about this. i saw between quarter won and quarter two that a decrease in terms of its importance. i think most of us would say that there is a softening in the price of oil, gas prices, but how susceptible are small businesses to those increases? >> according to the data, small businesses still report that within the top 10. even though it has increased in importance, it is still within the top 10 of the largest challenges facing small
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businesses today. i would also say that there is a seasonality that comes with energy prices and how it affects businesses. since this is a quarterly study, we look at that across four quarters and get a better idea of where it would fall. right now, i think it is no. 8. it is right there with a lack of credit, but it may go up in the next two quarters. >> st. louis, missouri, has four headquarters, peabody, a patriot, and another. they have located there because right across the mississippi are some of the largest coal deposits in the country. the have a high sulphur content which led to problems with the clean air act and now get most
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of our coal from wyoming. i cannot get around taking a shot here. my former boss used to call the u.s. "the saudi arabia of coal," we have made it so ridiculously uncompetitive to be able to use that resource to fuel what we do. over 50% of our energy comes from coal today. that will not change that much. we are all for exploring that, but on how employers view this, we are heavy on defense and a lot of those use energy to power the factories and processing centers. we have one nuclear power plant. when it was built, in the late paths, they built two one for the current one, and one that we have been debating it for three years now. here's what it comes down to.
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those employers are looking at their energy costs next quarter, unless they are locked in a long contract, but if their energy spikes at an aluminum smelter, or pick your manufacturer, you will not like the results. if you're looking at the stock price, it will hurt you there. we have an on welcome brawl between members of the utility companies and some who want to build that this nuclear facility, and building a nuclear basilic or any state in the union would be a construction zone for years. the providers and industrial consumers met with consumer groups that are fighting this and we cannot figure a way out of it. there is a great debate on energy policy that this area truly requires some looking into
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the future and sang what is best, in this case, up four misery in five, 10, 25 years and not just what fuel costs will be to run your smelter in three years. this is a great question. i am not so sure that it hits a smaller employer depending on what you do, but you can get a cross section that those of us in our business do not like to see our brothers shooting at each other too often. >> because the majority of our employees are in the field, we increase fuel prices and does not impact our bottom line. where it does have an impact is in our employees. able to get back and forth to work. we did have a number of employees over the last quarter who have resigned because they simply could not afford to make the trek between their homes and the sites. fortunately for us, though, with the increase the fuel prices,
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that means there generally is an increase in demand for security for public utilities and other energy providers, so we have been bidding on additional projects with local utility and energy companies. hopefully that will lead to additional jobs and people who left may come back and say that is closer to home and they can better deal with energy costs. what's the chiapas sides of the opportunity and the downside. >> there is a data point about a lot of uncertainty about what is going on at the national level. we are more optimistic about what is going on with our businesses and the local front, so we have to take a look at what this means for our businesses, for us, as family members, employees come and our community. >> that is a great segue because i think we are just about out of time. we have media here, opinion leaders, representatives of government, so i guess i would close it out by asking the three of you, what is it that you want
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them to hear? from the perspective of small businesses and representing small businesses and the respect about everything we have spoken about relating to small businesses, throw it out there. >> there is a great amount of uncertainty. as a small-business owner in terms of regulation, it would be helpful if our politicians could figure a way to stay out of our ways. we know what we do and we know how to do it well. we can create jobs to benefit our local community, so help us by moving out of the way, please and thank you. >> i will follow that up by saying back off. these ideas that are being dangerously considered, if you things that may get tough, but
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card check was the first threat. we still do not know what the health-care bill will do. some of the other regulations that are happening are really scaring away the jobber producers. tom said earlier. they will go where the talent is. the employers will migrate where they can find it. the one thing we have not touched on today is the education. 33% and more of a kid's going to the university of missouri, university of maryland, virginia, pick the school, are going to need it remedial math for reading. that is unacceptable. junior colleges, that is up to half. when you pay for the education twice, that is built in inefficiency. when the kids in career, ireland, singapore are cleaning our clocks with the durability
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in basic math and science, we have a big problem. when boeing does not know where to go when they're 2500 engineers will hit retirement age in the next three years. in st. louis we build the fet and we do not want to contract things like that -- we build the f-18. that means proactive reform. we just need to stop the destructive deforms going on here. >> for the 21% of small-business employers who can hire, lack of education and a lack of finding talent came in no. 12. 79% or not hiring this upcoming year, the headliners, from our data, our economic uncertainty, and lack of sales, and uncertainty in plants from washington.
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>> thank you very much. we could probably take this and have this conversation much longer, but we do have the rest of the panel. the key findings are on each of your desks and i hope you'll look at them. we intend to do this on a quarterly basis. we will be back next quarter. please join me in thanking the panel. i think these guys did a great job. [applause] with that, we will take a 10-15 minute break and be back with the panel that bruce johnson will lead. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]
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>> ladies and gentlemen, welcome the executive vice president of government affairs for the u.s. chamber of commerce. >> good afternoon, everybody. let me first apologize. i think you all can understand the reason we do not have the chief of staff and speaker of the house and the chief of staff for the senate majority leader
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who had agreed to spend some time with us today. they are with their bosses across the street over at the white house with the ongoing debt and deficit default negotiations. a rather legitimate reason for them to not be here, as i told them about midnight last night. "do your duty, served us well." we would otherwise miss you, but a perfectly understandable excuse not to be here today. in light of that, we will try to give you a quick update on some other issues that are currently somewhere in play in this town. joining me today, to my immediate right is the senior vice president for environment, technology, and regulatory affairs. to his right is john murphy, vice president of our
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international policy division. to his right is mike eastman, our executive director and labor, immigration, and employee benefits division. i cannot tell you much more than you have already read, seen, or heard a about the ongoing debt negotiations. i think the one important thing to note is at least the principals in the room negotiating have all said the same thing. the good news is what they are saying is that the fault is not an acceptable outcome. i continue to believe optimistically, with everyone saying that, that they all realize the repercussions of failing to achieve that. while we have the fits and starts, at some point, we will have a resolution one way or another to avoid defaults. having said that, let me start with john murphy.
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from a congressional perspective, the other hot issues or issue, if you will, surrounding the debt negotiations and occupying some attention and time in congress are the pending free-trade agreements from south korea to columbia, and panama. they have been stalled for several years and we were anxious to see them enacted. the president recently announced he would be sending them to congress. two weeks after that, the president then said first, however, he was putting congress on notice that they had to enact the expired it provisions on trade adjustment assistance and two days later asked for an extension and expansion of unemployment. following that, the senate minority leader, mitch mcconnell, stated that procedurally he wanted to take the trade adjustment assistance issue backward initiated several decades ago in the context of
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trade promotion authority which expired about 1.5 years ago and the current president does not have it. mitch mcconnell was very interested in reauthorize and trade promotion authority. interestingly, we have an agreement, i think, pretty much everywhere to move forward on the free trade agreements. we have some agreements on moving forward on reauthorize and trade adjustment assistance. we have a disagreement on the process and procedures of just exactly how those trade agreements and trade adjustment assistance, let alone trade promotion authority will be dealt with and addressed, and voted on by both chambers in congress. last week, we had mocked markups in the senate finance and house ways and means committee. i will stop there and ask john murphy to elaborate on the polar
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opposite outcome to give us some insight as to his read on whether -- on where we will end up going forward. >> thank you. as you look at the situation today, in today's global economy, when you stand still, you fall behind, and that is the panorama that our elected leaders are wrestling with care and 10 days ago, the european union entered into an agreement caribbean. canada will enter one with columbia. the united states is just a party to 11 trade agreements, covering 17 countries. the american people see this through a lens where they see trade as often been unfair.
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as a matter of fact, there are right. when the united states falls behind a trade, and we do not have these agreements, the result is our market is wide open. we are lever in which we are levying taxes on goods. -- we are levying taxes on goods. when we snot -- sell goods to korea, we are paying upwards of 30%. that is a recipe for being shut out of these booming markets. as bruce points out, we have made a lot of progress. there is considerable bipartisan support for moving forward with these agreements, and if we held a vote on the merits of each one of them, they would pass handily carry a lot hinges out of what comes out of the trade adjustment -- handily. a lot hinges on what comes out of this trade adjustment deal. a deal was struck on a new trade
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adjustments -- adjustment program that is much more physically restrained. this is, we believe, can be part of a bargain moving forward. basically, the perspective of the business community is that we need to get going now, or we will be losing out of these foreign markets, and we believe that some kind of the deal can be struck in the weeks ahead. >> do you want to share the vote count on a party-line basis? >> with regards to korea, in both of those committees, in the senate finance committee, every democrat voted in favor of the combined korea and trade adjustment assistance belt. in the house ways and means committee, every republican voted in favor, and every democrat voted against.
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that shows there is some polarization over the issue right now nonetheless, we do believe that if a procedural way can be found out of this, and you hear the expressions of support from so many people on both sides, that a way can be found for. >> john, your division released a study about what happens if we do not proceed and connect the is because of the eu and canada proceeding. >> we are talking about a jobs summit. the chamber conducted what it was really a pretty straightforward analysis of what happens while the year it hit -- european union, canada, and others move into free trade agreements while we do nothing. we stand to lose 380,000 jobs in this country. there are other analyses including one by the trade commission that estimates that
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the korea agreement alone could create 380,000 jobs here. we are a fourth in the road. we are a stark choice. half a million american jobs or more are in the balance. we think there is a strong case for moving down one of these roads, and not the other. >> let me ask mike eastman to start out by touching a little bit on the national labor relations board's stunning decision where they have decided that the boeing corporation, despite investing $1 billion should not be permitted to open up a new facility in south carolina, a right-to-work state. interesting, since nearly half of the country are right-to- work states. this has shaken the business community, some governors, and clearly corporate america. >> thank you. the national labor relations board is usually an esoteric
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government agency that few people have reason to know about. this complaint by the acting general counsel is the highest profile thing of the board having -- that i can think of the board having done in its assistance. we have an allegation that boeing discriminated against union workers in washington state by building a new facility in order to retaliate against workers for past strikes. the board -- is truly breathtaking the remedy the board is seeking. the board is seeking to try to force boeing to move all of that production in washington state. that is thousands of jobs, and more than $1 billion in construction costs so far. if it is really having a chilling effect across the world. we have heard from folks in canada and elsewhere that are taking a pause before making decisions about where to invest in this country, and i think it is the best example of over-
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reached by an aggressive agency. >> boeing, throughout this, has added several thousand jobs in the state of washington. >> exactly. this goes to the perverse nature of this complaint. somehow, the government complaining that boeing has discriminated against workers by adding two thousand jobs. >> of this esoteric agency appears to be going a little bit road? they seem to be simultaneously looking at issue in another decision that restricts the ability of employers to speak to employees, otherwise known as the persuader role. would you touch on this? boeing is the tip of the
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iceberg, and persuader is the rest of the iceberg. today, employers have free- speech rights. they have the right to communicate with employees about eight union and their opinion on what having a unionized work force would mean. the labor force is trying to use disclosure regulations to stomp out that speech. also, at the national labor relations board, in a one-two punch, we have a new proposal for much quicker elections. currently, union election take place in 38 days. the changes have been proposed to be as short as 10 to 15 days. this is targeting the employer free speech provision. it makes it much more difficult for employers to get their message out in response to a union campaign. >> what does congress think about some of the proposals that are bubbling up from nlrb?
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can we expect to see action the importer community can get behind? >> congress has begun exercising its oversight authority, especially in the house of representatives. there was a hearing last week on this new proposal. we will soon, i think, see consideration of different legislative vehicles to try to get this in the house, maybe through the appropriations process, such as limiting funds, perhaps through direct legislation. there is an opportunity for people in the business community and others to weigh in with legislators to stop the out-of-control nlrb, and the department of labour. >> might, while there are reportedly 100 proposed rule making is under this esoteric agency, as you refer to it, that
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are under way, one that concerns all business, but particularly small business, is the wage and hour early, were they are reportedly looking at changing titles of who is a supervisor, who qualifies for overtime. why don't you speak to that. >> the labor department currently has a proposal that is not just -- yet published as a proposed rule, but it is an idea they have of trying to force employers to communicate and hand a written analysis to every employee that is not entitled to overtime territory why they not entitled to overtime? why are they an independent contractor? this will be difficult to comply with. the fair labor standards act and its regulations are almost incomprehensible to people not totally consumed by the flsa. the law was written in the
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1930's, but it has only been amended marginally. even the best intense will make mistakes. handing these analyses to employees will be a recipe for frivolous litigation were there need not be any. >> john, before we leave trade entirely, would you take a couple of minutes because there rumor is that the generalized preference is going to be connected somehow to these other three agreements. it would be useful for everyone to know what the acts are, and what they do, and what we think is going to happen in terms of these free trade agreements. >> the generalized system of preferences, and the trade preference act are programs that give to the-free access to the u.s. market for specific products. covers 150 products from
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the world. they're generally not produced in the united states. the chamber did a study it and number of years ago and found that more than 70,000 jobs depend on gsp. these are manufacturing jobs were they need to have low-cost inputs, for instance they expired in one case -- instance. they expire in one case on december 31, and another in february. manufacturers are forced to pay these higher costs, which has been a problem for an array of industries. both of them have been added to the legislation for the columbia trade agreement, and that is not been controversial in the same way the trade adjustment assistance has been. if we find a way for the trade agreements, and they're all
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pretty much the same agenda here in the mind of the congress, we should see those renewed as well. >> thank you, john. bill, tom donahue, the chamber's president spoke earlier today, making comments about the need for regulatory reform, and the difficulty building anything in this country due to the restraints of regulatory agencies. he recommended permit streamlining, and said if we did so we position the country and have a much better solution going forward in terms of job creation and insuring competitiveness for the country since you could put project that chileans to construction. give everybody an exact -- put project into construction. did anybody -- everybody an example of where we have overcome stalled projects such as in the stimulus and the highway space a little bit, so
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they have contacts on either side. >> certainly, is hitting the nail right on the head. if you want to see where jobs are created, it is the fact you cannot build something if you do not get a permit to build. we wanted to find out how many stalled energy projects there were, and what was the value of those projects. in march of 2010, there were 361 energy projects that could not get permits. he may say so what, there are thousands of projects going out of this 3 ended 61, the private sector was willing to invest -- out of this 351, the private sector was willing to invest, and it would have created 1.3 trillion dollars in new gdp. after the projects were finished, there were going to create another 791,000 jobs.
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each one of those 351 project was stalled generally because of environmental litigation, and when you have within the environmental code about 40,000 pages of regulations, the fact it you would miss one of those regulations means you cannot get a permit. the fact that somebody is looking to 40,000 pages is really what is going on in this country. in terms of solutions, there have been solutions and they worked. in 2006, the safety bill, highway construction, they did a permit streamlining the provision that required to the below simple things. the first was to have a unique concept of the lead agency -- somebody that is responsible for the project. a imagine, a federal government agency that is responsible. just that simple aspect cut the
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time for when that project could be constructed and approved in half. another example, which is really quite remarkable, in the stimulus law that was passed in 2008, we all heard the term shovel-ready project, and now some people want to laugh and say there were not so many shovel-ready projects. the chamber at that point in time argued there were no projects that were shovel-ready, as they had already been done. we worked with senator dick grasso, and eventually senator boxer, and got a provision that said when you are of looking at how to implement the environmental impact statement, you have to impact them -- implement them in the most expeditious way possible that means if it does not have a problem, you do not go to a
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full-blown statement. nobody had any idea how many times that provision would be used. here in the end, under the administration's own numbers, that was used for 180,000 project out of the two hundred 10,000 projects, which gives you an idea of how a stock is. what are some of the things you could do? the president could do an executive order tomorrow requiring one agency to be the lead agency and to coordinate the statements, and could start some form of an office where you begin to really track the permits, and make sure the agencies are moving them through the system in time, rather than allowing them to linger for literally decades. >> the fcc recently took steps in this space with the shot clock. >> there is another example. the nation is moving forward
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with broadband for everyone, and it is really important because it is the one thing that gives anyone anywhere the chance to market their goods anywhere in the world, but one of the things needed is a south tower, and at one point in time there were over 700 cell towers being litigated so they could not get their permits. what the fcc did was set up a shot clock, where they -- if they could not get their permits in 150 days, they are authorized to go to court against the municipality. each one of these has moved the time from when you to get a permit from decades at times down to a few years. it is really important that you can do permit streamlining, but somebody has to be responsible and do it. >> bill, take a couple of minutes and explain to the audience with the energy
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savings performance contract legislation is. there is a pot of money there. bring it home in terms of the job summit. >> that is a great question. the energy savings performance contract is in this day and age and $80 billion authorization the cost the federal government nothing. under the energy independence and security act of 2007, congress authorized -- expanded to $80 billion a program where all the government has to do is accept bids from the private sector. it will not cost the government anything. the private sector finds a federal building that is in need of been energy efficient, which is the policy of the government to make it energy efficient, and they can bid to make that building energy efficient. they put in the air conditioning, the windows, what ever it is, and the private sector actually finance the
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project. the private sector then gives a guarantee to the government that there use will be less, therefore the private sector companies are paid overtime for the energy savings. in essence, they go in with no money from the federal government, and they actually promote the project. the program was moving forward and becoming very aggressive. then, essentially, when the stimulus came in, the federal agencies were allowed to use grants to do the same war, so the agency started using grants because they were used to using grants as opposed to taking bids. here is an example of an $80 billion authorization that can be done immediately. he treats tens of thousands of jobs, and it is not being used. there is an example where the president could issue an executive order tomorrow, ordering that this be utilized on a priority basis, and it does not require any appropriations. >> bill, canada is our
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country's #1 source of imported oil, the third largest reserves in the world. speak a little bit about the keystone pipeline with respect to permitting and jobs, if you would, since we will obviously need their energy sources. >> here is another example of jobs just sitting there. the keystone pipeline would go from the oil sands up in calgary, up to several points in the united states, one in the midwest, and one on the golf. it would stress several -- it would stretch several thousand miles, and the only thing it needs approval from the state department, and for some reason we cannot seem to be able to work out these kinds of approvals. if you go into the energy field, and go into what is not being approved, look, everybody is familiar with the fact we have not been able to get permits,
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but we have in royalties, just the royalties a little over $1 trillion, and if you start taking the tens of thousands of billions of dollars that it will take to construct the pipeline, you have jobs sitting there. he take prize is that can not get permits. if you take -- you take energy permits that cannot be rehabilitated, and you have private sector companies wanting to build a several thousand mile pipeline that will give us more oil, so we do not have to depend as much on oil from the middle east, and you can not get any of these things started. it is all regulatory. everyone of these projects is being held up. >> so, in the last remaining minutes here, quickly, since the projections from the energy administration are we are going to need 30% more electricity in the next quarter century, tell
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us everything congress and the administration is doing to ensure that we have the availability, supply, and the lines to transmit it, and the energy infrastructure projects capable of producing it and getting it to market. >> one of the things the project showed was that it is just as hard to do a transmission line as it is to do a cold-fire power plant. there are more projects whose permits are at risk that are renewable energy projects and are cold-fired power plants. there are 24 transmission line projects that are also being held up. we are beginning to close our coal-fire plants. we could lose as much as 20% of that capacity. we are doing relatively very little, but it comes back to the fact that these are things all
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within the control of the regulatory system, and at some point in time you need somebody that is responsible for moving these projects for 10 >> thank you, bill. i'm going to close this out pointed out the obvious. bill miller, before this presentation, unveiled a survey where uncertainty seems to be the theme. we have uncertainty in major areas of employers' concerns between opportunities to compete, opportunities to fuel power their businesses, and opportunities to manage with some degree of flexibility. until the paralysis is resolved, things are going to stay as is apparent i would finally end by point -- as is. i would finally end by pointing out that the biggest blanket of uncertainty is these ongoing debt default negotiations.
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until that is resolved, and all of us can move forward, the incidence of the financial markets are going to continue. with that, i understand we have a 15 minute break? now? we will make it a stage, for your final teammate -- we will vacate the stage for your final keynote speaker. thank you very much. [captions copyright national cable satellite corp. 2011] [captioning performed by national captioning institute] >> latest and gentlemen, please welcome back to the stage u.s. chamber of commerce president and ceo tom donahue. [applause] >> thank you very much. everybody is settled? our next speaker leads one of america's greatest, most innovative, and successful companies, general electric is commonly known as. jeff has one of the toughest and one of the best jobs in the
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world. ge is the sixth largest firm in the united states with a dazzling array of products from light bulbs to fuel sells to entertainment programming, too jet engines. it is the single largest exporting entities in the world. it is one of the original 12 companies that formed the dow jones industrial average, and still remains there, 115 years later. ge is a great american success story because of its people, including its leaders. just became chairman and ceo of ge in september of 2001. through 9/11, two recessions, and a rapidly globalizing economy, he has provided smart, steady, and visionary leadership. during his tenure, jeff has been named one of the world's best ge was namedimes,
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america's most admired companies and one of the world's most respected companies. it is no wonder that president obama capt. to chair his counsel on jobs and competitiveness, which is identifying needed actions to improve our economic performance and put americans back to work. jeff is following and a pride -- proud tradition of other ge leaders who have lent their time, energy, and expertise in service to their country, and he exemplifies the cost-minded optimism of former -- of a former ge employee, and one of his heroes, a fellow by the name of ronald reagan, who hosted the ge theater television program in the 1950's and 1960's he acted
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-- and acted as the company's goodwill ambassador current one other thing, he is a really good guy, as long as you have the answers. jeff immelt, give us the answers. [applause] good afternoon. i want to talk about not only how we create jobs in the united states, but the kind of leadership that is required. coming up disappointing jobs report, if we know we have a lot of work to do, but i want to start off by saying why i am confident we can meet this challenge. we had a meeting in durham, north carolina. i want to start today by telling you what i did after that meeting. i went to one of our aviation plants. it's a world-class facility. there are over 300 highly- skilled employees their current
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60% are veterans, and they're producing the world's largest jet engine, and also the world's largest -- most efficient and jet engine. sometimes people ask me if i have a state g e product. it is like asking a parent who is your favorite child, but everyone should have a chance to see a jet engine on the factory floor. in many ways, it is the future of american technology and american manufacturing. i talk about the durham, n.c., not because of what they're doing, but because of what they stand for. every single day they proves what we know is truth -- america can compete. an important part of my job is to be a cheerleader, but the results speak for themselves. last month, we sold $27 billion in service and engine deals. so, listen, we have some real challenges in this country. friday's jobs numbers are
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unquestionably bad news. i am here today as an optimist about the global economy and america's future. in the last month i visited china, russia, and europe, and saw growth opportunities for every ge business in every region. i'm confident we can compete, and we could grow. if we are experiencing record quarter in case in many of our businesses even today it as a company, we realize the playing field has changed. if growth looks and feels different than it has in the past. think of our history. for most of my career companies grew by developing and selling to the domestic market and the infrastructure of a growing and great nation. the u.s. consumer was the engine for global growth. today, in the early days of the 21st century, customers and growth opportunities are not just here, there quickly growing outside of the united states. over 1 billion consumers will join the middle class in the emerging markets.
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as a country, we of more competition than ever before, especially from china. the financial-services and housing engine that has fueled consumer spending and growth for decades is on the sidelines. he advances in productivity mean more work is done by fewer people -- normally a good thing, but one that could lead to short-term dislocations. due in large part to the late investments, the u.s. has a far less competitive infrastructure than in the past. both physical infrastructure, things like roads, and what is called intellectual infrastructure, the commitment to education and training we need to be competitive. small businesses, historically a big job creator, has been hurt by finance issues and economic uncertainty. as a result, the u.s. is growing more slowly than it has in previous recoveries. if we are not created enough growth. we have fiscal issues and few easy solutions to stimulate growth. these challenges have been
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impacted that opportunity in ways that do not always seem fair or in line with the dreams of previous generations. national confidence is low. the mood is pretty bad. let's face it, people are angry. american business is fairing better. even though the broader economy is not. corporate exports are growing. competitiveness is strong. if cash is available. we have dealt with a difficult recession. we are still dealing with molotov markets, and government- induced uncertainty, many american companies feel they have emerged from the financial crisis in better shape. at the same time, we have a jobs crisis that threatens our long- term competitiveness, and people are fed up. we really do have a serious disconnected business is good, but unemployment is high. it is not healthy, and it is not sustainable. now, companies can only be at their best when they are at peace with the government.
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that does not mean that we should agree with everything. we should not, and we do not, but we cannot always be fighting, and we cannot lose our sense of national purpose. our company -- our country can only prosper when people are at work. so, we need to act, and the private sector can do more. that is why i am leading the president of the council on jobs and competitiveness. i believe the private sector can and should do more to improve the performance of our own country. today, i would like to give you an update on the council and our activities, but i also want to say something about leadership, because i do not think any of us came to the council thinking that we would discover a magic potion for jobs. there is not one. even if their work, it would not mean much if we do not have the will to implement, the courage to make hard choices, or a commitment to lead. we are serving on the council
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because we truly believe we can be a catalyst for action. the council consists of 26 members, representing global and domestic companies, large and small enterprises, great on to producers, union leaders, and economists. the group has been together for four months, and we are hard at work. the council's approach has been to identify and focus on the specific and actionable ideas that will create jobs and increase competitiveness. we will report on them simply and clearly, without regard to politics. we are business people. our metric is not who has the upper hand in a political stalemate. it is action and demonstrated results. i could show you dozens of studies on job creation. i could produce hundreds of speeches. those are just words. we want the counsel to be about action. that is what will make a difference, and we need your
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help. we have five guidelines that we started with as we shape the council and the activity for the council. first on our approach is primarily non-legislative. we want to bridge the private and private -- public and private sector, but we try to operate around washington gridlock. we are developing a comprehensive, analytical, sector-by-sector jobs program, identified jobs opportunities, focusing on the highest pockets of unemployment, and strategic opportunities for growth. third, we will create specific job-creating business plans. jobs come from specific activities, not macro concept. we have identified dozens of job plans so far, and i expect we will have more than 100 by the time we are done. fourth, the council has key operating partners inside the white house. each initiative has an odor in the government, and this is helpful to drive ideas to
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action. we are reviewing the prod -- the process every two weeks, and cabinet members and administrators staff are being held accountable, and are in the game. lastly, we will connect with people throughout the country with sessions for interested groups. we will incorporate a broad range of ideas into specific programs. there will always be cynicism. we know that. you offset that by including people, and by being transparent. our approach has been to start in areas where we can build short-term momentum. we reported a series of these quick action ideas to the president in june, and they were to focus on jobs, supply, and demand. our goal was to identify programs that could get people back to work fast. we identified simple ideas that could generate up to 1 million new jobs. we think that doing small things builds the confidence that larger to initiatives are possible. i will give you two examples.
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we believe there are three and a thousand jobs available in the hospitality industry by reducing the cycle time. we have lost massive market share improvements to this are under way in the government today. we are focusing on education and training. we are formulating a plan to graduate 10,000 more engineers in the u.s. every year. when you put a focus leader on an important initiative, you can get results. we are already engaged in the schools, but the people in this room could do more, too. i have asked the other u.s. companies to commit to doubling the number of engineers in terms that we recruit from u.s. colleges and universities. work-force training for jobs and competitiveness also matters. there are thousands of open jobs in the best manufacturing and health-care fields, and our training programs have not involved to keep up with changes in technology or the needs of
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employers ^ darling miller, a member of the chamber, is on the council, and she will tell you firsthand how manufacturers cannot find the people they need to still open jobs. the health-care industry as a persistent and the demand of hundreds of thousands of jobs, and we are finding a way to partner with community colleges and technical schools to enroll more students in certification programs and bill the work force that will thrive in the global economy. the national association of manufacturers is working with us on this challenge. we are the can at least put constructing -- construction workers back to work. we have nine projects under way with more to come, and we have lined up private financing. we're leaving this approach to the better billion initiative. over the summer, we are working on ideas that could ban the curve on employment. these are bigger ideas that could create more jobs, but may
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take longer to implement, likens the structure. that is an area where, and i plan to work together, and we are hosting a summit in the dallas, highlighting the important link between transportation, infrastructure investment, job creation, and competitiveness. if we want to push the enactment of a multi-year aviation operation. we want to reform how the infrastructure funds are allocated, reducing cycle times and costs. we will promote private financing options to get these infrastructure projects moving. steve case is leading a team that will accelerate the formation of high-growth companies. these start-ups have been the engine of job creation for decades, but have been massively effected during the recession. we need to unlock on for no rek aspirations, and we need to
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build support. under armour, in this area, the baltimore area, is a perfect example of the kind of company that we are talking about. it was started by a maryland football player who was selling shirts out of the trunk of his car. he got it to under $50,000 small business loan, most of which was guaranteed -- 250,000 small business loan, most of which was guaranteed, and he is built a leading brand. we think there are hundreds of these companies out there today. antonio perez is leading to another team. we believe the u.s. can compete today as a production and a software site. the u.s. trails other developed countries as a destination for foreign investment, and such investment has declined since the crisis. at the same time, i know there is some outsourced work that can return to the united states because of our innovation and productivity trend we also work
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on ideas for other long-term competitiveness areas, which include tax reform, regulatory simplification, and education investments. these will take courage, and time, and will take facing into gridlock. we must reform all systems of competitiveness to drive growth, and we will need faster growth to sustain employment at acceptable levels of long term. by year end, we expect to recommend a set of business plans that could create millions of new jobs, and we are grinding the numbers, the process changes, and to will be accountable. job creation will always be facilitated by broad economic growth, and there are many places the u.s. can lead the sun great strength, and innovation, but we must get our confidence back, our will to compete, and that starts with jobs. our next meeting will be with the president in september, but our work is ongoing. it will remain what it must
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become a specific, comprehensive, practical, non- partisan, and urgent, and of course actable, focused on real results, because leadership is not about talking about the path. is more than just showing the way. it is about getting the job done. ge will do our part. over the last decade, our percentage of global revenues have grown from 30% of the company to 65% of the company in 2011. our revenue in emerging markets will grow by 20% this year. nonetheless, we will add almost 15,000 jobs in the u.s., including 6500 manufacturing jobs. in 2011, our exports should exceed $20 billion, up from $7 billion in 2005, which is creating jobs in the indebted states. our competitiveness is based on the factors that mayor america's opportunities. we are dedicated to research and the element. because of that commitment, we
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are launching 26% more products this year than at any time in our history. manufacturing is our core competency. we have most productive and software development back to the united states. we of orients the company to solving the problems and clean energy and affordable health care. we are the largest clean energy company with $21 billion of revenue, and we are launching 100 new health-care products and lower costs, in prose quality, and advance -- improve quantity, and a dance -- advance access. i am american, and i want to see us compete. none of this will happen without important changes in attitude and leadership in the public and private sectors. coming out of the financial crisis, we are at each other's throats more than is necessary. there is no shortage of need or
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ideas. what is lacking is a commitment to action, and a commitment to leadership by all parties. in the business world we have what we call a say-do ratio, the massed between rhetoric and action. on american jobs, the public and private sector has a low say-do ratio. we all have a stake in this. we simply need a different style of leadership to create jobs. first and foremost, leadership and job creation requires a sense of urgency and a sense of prioritization. the president thinks jobs are important. so does congress. so do the republicans and democrats. so does the business roundtable. so does this chamber. the only thing we are not really taking action on is jobs. last thursday, the day before
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the disappointing june jobs numbers were released, i read the "wall street journal" cover- to-cover." for more than 50 headlines, only one job story referenced job creation. if this is more symbolic than substantive, but it does say we are distracted. jobs are important, we need to do a better job of prioritizing. so, let's do something. let's do something. take for example the three free trade agreements. we know this will create jobs, growth, and make us more competitive. nonetheless, there late, stocks, and at the risk of going nowhere. -- stocks, and at the risk of going nowhere. we should get these approved, and we should do this today. meanwhile, south korea has already signed trade agreements with europe, and china is becoming the biggest economy on earth because they have a single-minded focus and creating
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jobs, and we should have a similar focus. second, and leadership requires metrics scared every initiatives should be measured against a jobs standard. this is true in the public and private sectors. nowhere is this more true than with regulation. the heightened regulatory structure that has been put in place in the united states for the past 10 to 15 years might be justified on some grounds, and some agencies are better than others, but it is clear that this regulation is hurting jobs -- activist regulation is hurting jobs and competitiveness. we are pleased with the executive order the president issued this morning. since the council was created, we have been urging the administration to streamline the regulatory process is, and they listened. the council will continue to make these recommendations and the catalyzing forced to make it happen. as i said earlier, we conducted us listening sessions.
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we met with 100 small businesses in dayton that did story after story about the red tape associated with financing and government contractor similarly, in durham, n.c., the referenced their difficulties with the fda. many have decided to launch businesses in other countries. we simply need a more healthy debate between agency, actions, and jobs, and we need it now. we also need to make sure that all of the resources that are headed in the direction of job creation, like other global companies we favor repatriation of foreign cash back to the united states where it could do good. at the same time, i believe senator chuck schumer has a good idea. if those taxes to go to create a new infrastructure bank. that creates jobs. job metrics should be included in all policy-making. leadership requires more
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collisions, and your causes. the american people are angry, but i consider this definitively, and does not create jobs, timber does. -- team work does. exports are example of a coalition that is working. big business leaves, small business follows, and the government assists. this unified people, in you know what? i know we can succeed. next, we need to build a coalition around important like we are the only country that lacks a broad energy team. every other country is creating jobs around clean energy. the edison collected institute says there are millions of jobs available with some policy clarity around grid development or energy standards. all of these can be privately financed. similarly, the u.s. has the
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chance to the natural gas leader for the next century, yet we have no plan to drive this leadership. instead of leadership, age group is battling for. , or worse, tried to block new investment businesses have to speak about the need for comments and ideas that support growth and competitiveness. fourth, leadership requires risk and creativity. now was the time to try new things. this is true in business and government indiana and texas are proves that governments can create incentives and an environmental -- have a regulatory climate where jobs can be created. even in new york, we'll see more flexibility in the last year. as states compete for jobs, who have a few best practices we can work on on a national level. a the same time, businesses need to innovate to korean-american jobs as well. ge has experimented -- to create american jobs as well.
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in software centers we are cost effective against india. our engine manufacturing in ohio, n.c., mississippi, and pennsylvania, is the most cost competitive in the world. our work for sears competitive and well-trained, and we've invested substantial resources and manufacturing technology. i would ask each of you to review your outsourcing. that is jobs and does less the u.s. for cost reasons. u.s. productivity -- that have left the u.s. for cost reasons. u.s. productivity has improved, and i believe these jobs can return. leadership has always existed in the u.s.. small businesses lagging, as our ipo's. lastly, leaders have to speak with confidence, and not fear. people want to be led.
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businesses need stability and confidence to invest. right now, we are not offering stability or confidence. ge is a legacy u.s. company. we have been around a long time. we of whether the toughest recessions. through multiple cycles in the last decade, since 2000, we have earned more than $175 billion, the third most in the world. police become a financial crisis and the recession were tough on ge, but we had a vision for our own people. we never reduced the $1 billion we invest for training, and we cited new four-year contract with our unions. our team is well paid, and they do great work. nonetheless, we needed changes in which points, healthcare, and pensions, with the to do's -- with a few tough moments, but we got a deal done. we build trust with our unions. as a country, we must transition
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our work force for the global reality in a post-crisis world, and this will require more training and more innovation. we must show the american workers a vision for the future and help them to compete. we all know today the president and congressional leaders are continuing talks on the federal deficit. it is, of course, clear, that these talks are at a critical juncture, but we as a country need to be solving the tough problems, and it is really time to get this behind us. the country is looking now for that kind of leadership -- leadership that will create economic certainty and stability, and will help ultimately to create jobs. we cannot stop the rest of the world from the balkans and modernizing, but we can compete, and we can win. i'm convinced that the council recognizes new leaders compared as are required. i believe the president believes this as well. i'm asking for your help, the
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chamber's halt. the private sector must take the important for steps -- first steps. focus on the jobs you can create or add, review opportunities to in source capability, take risks on investment, and of the few collisions. we have to move today, and we have to move fast. this building, this chamber, and what exists around the country is a symbol of capitalism. but critics of capitalism are still out there. but their criticism has proved to be wrong and ineffective. similarly, the people that are part of the business sector, the people in this room, and our colleagues, we have to stop complaining about government and get some action under way. there is no excuse today for lack of leadership, so let's get with it. i know that no company will benefit if the u.s. economy stagnates until the 2012 elections.
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i want to work with the president constructively to make the country more competitive and create jobs. i have always believed that in the 20 percent american companies must be competitive for investors, and they must also be positive source for change. as the country emerges from a financial crisis, i think we are fighting the wrong battle. in the end, more regulation, class warfare, and partisan politics are not willing to help the country grow, but business must regain its voice, and its credibility to drive competitiveness and create jobs. i want to be part of that conversation, and part of the solution. the truth is we all need to be part of the solution, every single one of us is to be a catalyst. the world is getting better. the world is getting better. but it is impossible for american business to ultimately win if the country and its work
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force are losing. is just not sustainable. job growth is important to build -- to build a national conference, and the council serves as a catalyst for job creation. we welcome your input and your participation, and we need it, because together we can make right ideas happened. american workers do not want to push the side until the next election and we to see what the political landscape looks like. they cannot afford that. 4g or any other, the company that is not an option. we need to leave and we need results. i speak for the entire council. i really do. when i say we are determined to make a difference. i'm convinced, with your help, we will. tom, thank you, it is great to be here. [applause] >> thank you, very much -- thank
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you very much, jeff. that was a well-thought out message, which we like because it said some of the messages we are trying soon carry. you will get the help from the people here and around the country because you have really set a focus that talk is not very important, but results are, and we will do everything we can to help you succeed. the message that i most want to thank you for a while i am thanking all of the other speakers and everyone that came to help us today is that action is going to provide the results, and we have to get on with it. thank you so much for being with us, and for your very strong message. [applause] >> today on c-span, live from salt lake city, we will be covering the national governor''
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association summer meeting, with remarks from governors and from arizona and maryland on the security of borders and communities. the associated press is reporting that governor martin o'malley, the head of the democratic governors' association is a coding g.o. be debt negotiators are trying to the -- gop debt negotiators are trying to damage the economy so that president obama will lose the election next year. our "newsmakers" guest is ire ofine grego washington. more live coverage of the nga continues tomorrow. they will discuss education, in addition, and competitiveness. he could watch said lives tomorrow at 1:30 p.m. eastern. meanwhile, on capitol hill, the
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house is back in monday on suspension bills with roll-call votes expected after 6:30 p.m.. they will mark up the cut, cap, on tuesday. thbill later in the week, bills aimed at making it easier to overturn regulation issued by the consumer protection bureau, and an appropriations bill for the legislative branch for 2012. the senate is also back monday for morning business at 2:00 p.m., resuming consideration of the military bill, and then to considered a nomination for the u.s. district judge for the southern district of new york. you can watch the senate live on c-span two, and the house live
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on c-span. you can check out the cut, cap, and balance bill on our website. a number of plants had been proposed, including one from the president that included $4 trillion in cuts. was rejected because it included tax increases. mitch mcconnell is attempting to give the president the authority to raise the debt ceiling while bypassing the need to vote on the measure. tom coburn will lay out his plans to cut the deficit. he was one of the gang of six working on a bipartisan deal. he left those negotiations in may to work on his own plan. he will hold a news conference to announce his plan live, monday, at 2:30 p.m. eastern and you can watch and our companion network, c-span3. kathleen sebelius testified on a provision in the 2010 health care law ... week.
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the provision gives more power to the independent payment advisory board, a panel that makes recommendations aimed at holding down medicare costs she also -- costs. she also criticized a plan that would change medicare as it is currently structured. this hearing is three hours. >> the committee will come to order. we will begin our hearing. madam secretary, i know how excited you are to be here today. thank you for coming. all believe -- i will begin with some brief opening remarks. first of all, i want to thank you, madame secretary, and our other panelists for today's hearing. for years, politicians in both parties have not been honest with the american people about medicare. the facts are clear. health-care costs are skyrocketing, growing at 8% a year. medicare spending is on pace to
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double over the next decade, exhausting its remaining funds. 10,000 baby boomers are retiring every day as fewer workers are left came into the program. life expectancy was at 71 medicare was created. today, it is at 79. nonpartisan experts, including the congressional budget office and medicare's owned trustees warn about the insolvency of the program. these arethese are facts. too many politicians from both parties in washington have offered nothing but false attacks and empty promises. we deserve better. our seniors deserve better. through this committee's efforts, i believe the debate is shifting to better reflect medicare is inescapable math. president obama was exactly right when he stated yesterday, "if you look at the numbers,
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medicare will run out of money and we will not be able to sustain that program no matter how much taxes go up. it is not an option for us to just sit by and do nothing." i could not have said it better myself. senator joe lieberman who has worked in a bipartisan manner to offer ideas recently said, "we can only save medicare if we change it." i imagine me will hear about the expansions of government in this 2700 pager law. we're focusing on page 1000 from section and 3403. the independent pay me advisory board, an executive branch agency created by the new health
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care law which empowers this board of 15 and elected officials to reduce medicare spending. unless overturned by supermajority, the recommended cuts by this board will become law. a partisan concerns have been raised. the proponents claimed beneficiaries will be harmless, but how can you provide short cuts to providers without an adverse impact on patients? given the unprecedented new power over medicare, to home are these 15 bureaucrats accountable? there are bipartisan concerns about this question. democrats, including members of this committee, have raised concerns turning their responsibilities over to this board. seniors are also seeking clarity on the president's efforts to expand this board's power over medicare. in a speech, he called to further expand medicare's costs.
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the reimbursement rates are well below the artificially low medicaid rate. according to the chief actuary of medicare, the health care law will pay doctors less than half of what their services cost and down the 33% in decades ahead. he warns these cuts are driving medicare providers out of business and results in harsh disruptions to access for seniors. the president's remarks calls for this to slash reimbursement rates. it remains incumbent upon the administration to specify how this board will squeeze out hundreds of billions of dollars of additional dollars from medicare over the next decade, as proposed by the president. i want to thank the secretary sebelius for coming here today. there's no question we have differences on how to address
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medicare is unsustainable future, but i appreciate your commitment to clarifying this debate for policymakers and the american people. i also want to thank our second panel will further discuss the merits of this approach. we look forward to testimony from doug holtz-eakin, of and others. thank you for its contributions to this debate and would they do offer joining in this conversation. i yield to the ranking member, mr. van holland, for any opening remarks he may have. >> i want to join chairman and rhyming immelt -- brian in joining in on -- chairman ryan in welcoming you to the committee. the rules and guidelines that you recently released to govern the changes which will open the
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door to millions of more americans being able to have affordable health care in the united states of america. the other there receive less attention was your announced initiative to improve the coordination of care for individuals were both on medicaid and medicare called the dual eligibles. as you have pointed out, using some of the innovative approaches in the affordable health care act, we can improve the quality of care and save money through some of the changes were proposing there. those are important parts of the affordable care at that together will strengthen health care protections for the american people including provisions that have already taken into effect including making sure that insurance companies can no longer discriminate against kids with asthma, diabetes, or other pre- existing conditions by denying coverage including making sure that young people look to the age of 26 can stay on their
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parents' health care plans including providing tax credits, to hundreds of thousands of small businesses who can now afford to provide coverage to their patients and including beginning and ultimately closing the prescription club do hold that many seniors find themselves trapped in. those are some of the important improvements that have been made. i believe that the fundamental question, the fundamental underlying question of today's hearing is what is the best way to strengthen our health-care system and, specifically, how do we keep the promise of medicare and meet the challenges of medicare? as the chairman has said, one approach is to build upon the very important reforms that were enacted in the affordable health care act. the medicare trustees have found that those measures will indeed reduce the per-capita costs for
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medicare beneficiaries going forward, the increase in per- capita costs. it will help bend occurred and it will extend the solvency of medicare. we need to build upon those approaches. as we have heard in testimony before this committee, the affordable care act opens all sorts of new avenues to try and modernize the structure of medicare, which we need to do. we need to change the incentive structure so that it rewards the quality of care, the value of care over the volume of care and the quantity of care. mr. chairman, we agree that significant changes need to be made to modernize the system in that way. the independent payment advisory board is simply one tool in the toolbox for getting it done. it creates a backstop or fail- safe provision to ensure the continued in solvency of medicare if, and only if,
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congress chooses not to act, to take other measures to build on the kind of changes we saw in the affordable health care act. the independent paper board is prohibited by law from changing medicare benefits. that prerogative is a reserve for the congress. moreover, the latest cbo projections indicate that the rate of growth in spending for beneficiaries are below the target rates of growth for fiscal years 2015-200021 and therefore cbo projects under current law this mechanism will not affect medicare spending during the 2011-2021 time. building on the approach is one way. what is the other approach? the other approach is the path set forward in the republican budget plan, a plan that will
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and the medicare guaranteed and will force medicare beneficiaries into the private insurance market. that plant is a double whammy for medicare beneficiaries. the congressional budget office has determined that plan will actually drive up overall health-care costs. it changes the allocation and burden, but it drives up costs why? because providing that care in the market is more expensive. if you look at the history of per-capita growth rates compared to per-capita growth rates in medicare, medicare has outperformed the private market. you are saying to those seniors that we will toss them into the private market where they will face higher premiums and costs. why is that a double whammy? because as you do that, you
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dramatically reduce the support for medicare beneficiaries from the federal budget -- federal government. as the cbo has pointed out, by the year 2013, you essentially move the border from where it is today. today, the medicare beneficiary average picks up 30% of the costs in the medicare program picks up 70%. by the year 2013 under the republican a plan come it will be the reverse because of the rising costs of care and the diminishing support for medicare. i did want to really wrapped up with this point. we have heard it said that what the republican plan offers medicare beneficiaries is really the same as what members of congress get. the reason that is simply untrue is because members of congress, by law, have a certain percentage of their health-care
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premiums supported by the federal government, by the taxpayers. under what is called the fair share formula, that ranges from 72-75% on average. that is the cher picked up by the federal government. under the republican plan, we will be asking essentially medicare beneficiaries to pay that cost up themselves and the federal government will pick up only the remainder. essentially, the flip of the deal that members of congress give themselves. that is unfair. we have to make choices. we have said many times that to govern is to choose. we have a lot of members on our side who are not wild about the advisory board. we are united, and i believe the people united that it is a better approach and we need to fix the kinks as we go along. the idea of ending medicare, i
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guarantee, throwing that decision not to experts confirmed by the senate, is a backstop, but people on the front line will be the insurance industry. it is the insurance industry that fixes the benefits in consultation with the federal bureaucrats. they will set the premiums and they will choose not to pay at the end of the day. that is the choice, mr. chairman. thank you for holding this hearing and i look forward to testimony. >> the floor is yours, madam secretary. >> thank you, mr. chairman. chairman ryan, ranking member van hollenbeck, members of the committee, i appreciate you inviting me here today to discuss and the affordable health care act is strengthening medicare for seniors today and tomorrow. i have written testimony to provide more detail, but i want to highlight some of the steps
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we're taking as a part of the health care law to fill the gaps, improve care, and make the program more sustainable for the future of preserving guarantees for seniors and for people with disabilities. when medicare became law in 1965, it served as a national promise that seniors would not go broke because of a hospital bill. in 2006, the medicare program added coverage for prescription drugs which makes up a growing share beneficiary health-care costs. we know that to many seniors struggle to afford their medications which is why the affordable health care act provided relief to 4 million beneficiaries who fall year in and out into the doughnut hole. in 2010, there is a onetime tax- free check for two under $50. some of the beneficiaries say they basically took that check and went right to the drugstore to pay a part of their bills.
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this year, because of the affordable health care act from those same beneficiaries are getting a 50% discount on a covered name-brand drugs. by 2020, that gap will coast -- close completely. we also know that many seniors are going without preventive care that could help prevent ellis before it occurs, lowering costs and saving lives. in some cases, they were doing that because of expensive co- pay. that does not make sense. the law allows medicare beneficiaries to receive preventive services like screenings for colon and breast cancer as well as an annual wellness visit. it is the right and a smart thing to do because it helps us catch small health problems before they turn into big ones. the law helps improve the quality and safety of care for people with medicare.
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we know that there are model hospitals across the country that have adopted best practices to dramatically increase the quality of care. for every common medical error, we have examples of health systems that have reduced or eliminated them. there is no reason why all medicare beneficiaries should not enjoy that same quality of care, wherever they receive it. that is why the affordable health care act provide unprecedented support to help these practices spread. in march, we launched the partnership for patients, a historic partnership with employers, unions, hospital leaders, physicians, and patient advocates to reduce farm and error in our nation's hospitals. last week, we were able to announce more than 2000 hospitals have are designed up and taking steps to improve care. this is aimed at two very important goals.
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reducing remissions and hospital acquired conditions. under the law, we also established a first of its kind medicare-medicaid coordination office that congressman van hollen referred to the often received a fragmented or duplicative care as a result. the new medicare and medicaid innovation center created by law would test a wide range of additional models for increasing the quality of care, strategies for helping seniors manage their chronic conditions, to new models in which hospitals and doctors to help keep their patients healthy and not hospital can share in the cost of savings they create. together, these reforms are dramatically strengthening medicare today for seniors and americans with disabilities.
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because doing care of the right way and often costs less. many of the laws and reforms are aimed at improving care and reducing medicare costs. the partnership for patients will save medicare as much as $50 billion over the next 10 years by reducing errors that lead to unnecessary care. the law does not stop there. it also contains important new tools to stamp out waste, fraud, and abuse. for fiscal year 2010 the anti- fraud ever to return $4 billion to taxpayers and these tools in the affordable health care act help was to build on that. the medicare trustees estimate that these reforms have already extended the insolvency of the front until 2024.
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the trust fund would have been insolvent five years from now. when it comes to medicare's future, we cannot take any chances. that is what the law creating independent payment advisory boards. it will be a backstop, a failsafe to ensure medicare remains solvent for years to come. as you know, it is made up of 15 health experts including doctors, health care professionals, employers, and economists, and consumer representatives. members are recommended by congress, appointed by the president, and confirmed by the senate. each year, the board will be charged with recommending improvements to medicare. the recommendations must improve care and help control costs. for example, the board can recommend ways to reduce medical errors and crack down on waste and fraud. contrary to what some have suggested, it will not ration
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care or shift the cost to seniors. in fact, the board is forbidden by law to make any recommendations that would ration care, reduced benefits, raise premiums, or increased cost sharing or alter eligibility. it leaves all of the final decisions in the hands of congress. if medicare spending begins to threaten the program's future, the board will make recommendations to create the necessary savings without shifting the cost of care to seniors and those with disabilities. it is up to congress whether or not to accept a recommendation door to come up with recommendations of their run to put medicare spending on a stable, sustainable path. in other words, the recommendations are only recommended when excessive spending growth is not addressed and no other actions are being taken to bring spending in line. the non-partisan congressional
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budget office and the independent medicare actuary both predict that the board is unlikely to be necessary any time soon. this is thanks to the work that we are already doing to slow down rising costs. we cannot know about the future which is why experts across the country, including independent economists that the cbo, believe that this is a needed safeguard, and we agree. we believe the best way to strengthen medicare for today and tomorrow is to fill the gap in coverage, crack down on waste and fraud, bring down the costs of improving care. that is what we're working to do given the new tools in the health care law. over the last 16 months, our department has focused on working with congress and partners across the country to implement the new law quickly and effectively. in the coming months, i look forward to working with you to continue those efforts and make sure americans can take advantage of of of the new law has to offer. thank you again, mr. chairman.
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>> as i mentioned in my opening, i quoted the president, which i thought was head on with his remarks about medicare. the trustees predicted you will go bankrupt in 2024, the cbo says it is nine years. do you agree with the chief actuary that the traditional fee-for-service program is unsustainable and will soon fail to deliver the care that seniors depend on talks -- on? >> beeper service programs have incentives in the wrong places. we pay for care that delivers very poor results and, in many cases, if people are sicker, they stay in the hospital longer, acquire more infections, are readmitted, and that hospital makes additional money as opposed to preventative,
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aggressive, home base, patient- centered care which is more desirable by the patient and doctor, but actually lowers the cost. the affordable care act gives medicare the tools and the direction to actually align the incentives. i think the payment strategy, too. >> on that premise, we would agree. the current system is unsustainable and as all the wrong incentives, part of the reason it is being driven towards bankruptcy. >> fee-for-service, yes, it is unsustainable. >> could you bring up chart one, please. here is the question we have. i have three questions. how best do we solve this problem? according to your chief actuary, providers who are reimbursed receive 80% of what a private care offers. as we all know, what inevitably
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happens is that a provider loses money on medicare patient and they will overcharge the private payer to make up the difference which puts more pressure on prices and health-care costs. under the health care law, the affordable health care act, this falls from 80% 40% and to 33% by 2015. hospitals suffer the same fate and this is the rate incurred during the new law. a 67% drop in prices relative to what private plans pay over the course of this window, so we are already paying the providers through medicare far less than they would get other rise and the most cases, less than the cost of the care. basically, i have three questions. do you agree with the chief actuary that cutting payments to providers of does have an effect? here is what he said.
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by the year 2050, 40% of hospitals, skilled nursing facilities, and home health agencies will have negative margins. they will go bankrupt. that means they will leave the business of providing services to medicare beneficiaries. do you agree that cutting payments to providers has an effect on them in such a way? >> i do believe that, certainly, cutting payment does have an impact. medicare cost trends are significantly, i would say, better than the private sector. it is growing up 4.9% as opposed to the private sector growth of about 7.2% over the past 10 years. i did believe that medicare has the opportunity to are actually change the cost trend by improving the underlying cost of delivering health care as opposed to the house republican
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just shift those costs on to seniors and those with disabilities and not address the underlying costs at all. improving care and lowering costs makes more sense than just shifting the cost. >> this chart shows of the affordable health care act that reimbursements to hospitals go down. the on chart two, this is the physician chart which shows medicare and medicaid going down precipitously under this. if we underpay them, and we will save more money. the question is if we keep underpaying them, will they keep delivering this service? our issue here is if there are fewer providers because their payments are going down so far below their costs, we have 10,000 baby boomers retiring every day. do you not agree that if we underpaid them that they would just stop seeing beneficiaries?
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>> i think the assumption is that nothing changes in care or the care trajectory, that we keep paying at the same, not only rate, but keep paying for the same kinds of services. if you assume that care delivery does not change and all and we continue paying for good care the same as bad care, that we do not have any changes in underlying care, we do not coordinate care, we do not have more patient-based care, and we keep churning out one of every five medicare patients going in and out of the hospital whether or not they have seen a provider of, that trend line would probably be accurate. i would suggest that what the affordable health care act does, and what we have begun to do successfully in the early days with the innovation center and the very enthusiastic support of a lot of health care providers across the country is to look at
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were the best practices are, where the hospitals are that have actually delivered a very high-quality care well below the trend line and capture that then reach out to others to try and accelerate that change and use the enormous payment leverage of the medicare system to do just that, drive best practices. >> right now, we are looking at a wall that would pay providers 80 cents on the $1, then 66 cents on the $1. then it would go down to 33 cents on the $1. you are saying that we will be able to mastermind how to pay for this care at those low rates and they will still provide services? this is what i do not understand. do you believe that there will be a time where if you are going to dramatically underpaid for a service to provider that they will just stop providing the service? is that not rationing?
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if you do not pay them anything close to what it costs, will they just stop providing the service tax-- the services? >> i would suggest that what will occur and what is occurring is a different kind of the service being provided, a different strategy around health care services, and one that suggests that doctors and hospitals through mechanisms like the accountable care organization actually grew up together around quality care delivery and share in the savings that they have achieved. we have heard from very enthusiastic participants around that strategy. i think you capture the status quo and you just drive that into the future and nothing ever changes, this would probably be an accurate chart. i did not believe that is sustainable. i also do not believe, mr.
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chairman, that just taking the cost trends and shifting the burden on to seniors and those with disabilities, which the plan that has been passed by the house of representatives does, addresses this at all. it just means more of the costs will be paid by seniors and those on disability. does not bring in more doctors, change the cost, deliver better care. it means that your and your seniors will be able to afford the care that they need. >> can you bring up chart 3? this chart shows you what we thought the can -- the prescription drug law would cost initially. cms estimated it would be one number and the cbo projected another. it came in 41% below cbo projections verses the cms
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projection. if you had to do this over again, because at the time, there was debate about how to do the drug program. the republican view prevailed at that time which was to have a medicare certify private plans to offer drug benefits to seniors and each year they can choose among competing plans for their benefit. that act of choice and competition, according to your actuary, accounts for the 5% of the cost reductions or the savings from the projection. if you had to do it all over again, would you scrap the part d program and gone with the original point of view that it should be one program run by medicare and not competing plans? >> i do not know that i can answer that question. there were a few fatal flaws in
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part d that i would change, one being the design, so that the seniors who got the most prescriptions fell into a coverage gap but. the reason that medicare is becoming less solvent is that we have a huge unfunded liability. >> you are stuck with multiple plans that people can choose from, but you sided with the position that we should just have a one size fits all issue. >> there are some fatal flaws that have been corrected. i do think that the drug program is an essential benefits that many seniors rely on. i cannot tell you the cost estimates of one verses' money. i do think medicare still pays drugs at a higher price than anyone. as a governor who used to run a program right negotiated for
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drug prices, i can tell you we are still repaying. >> it should seniors be given a choice of plans to choose from to get their drug benefits? >> seniors are given a choice of medicare programs now with medicare advantage. many also have some fee-for- service plans along with traditional medicare. medicare's advantage, the private market strategy, is still well above the fee-for- service strategy and no beneficial health results. >> you agree with the idea that seniors ought to have plans from which to choose from. is that correct. >> you tell me what we're looking at. >> i am asking about part d. should they have a choice of plans for their drug benefit? >> as opposed to what? crags as opposed to the other
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plans? >> a not negotiate a 30% rate? having drug benefits is critical and i would like to get seniors drug benefit that the best possible cost. >> here is the point we are trying to get at here. the affordable health care law and the medicare guaranteed. it will end medicare as we know it. it will take $500 billion to spend on this and it will put a cap on medicare. this is the first time we have actually capt. entitlement. no one is arguing against capping spending around here. the only difference is that this lot empires -- empowers the board with the unilateral power to live underneath that. you mentioned affordable care organizations. there is not a writer in wisconsin willing to sign up for this. what are concerned is that if we invest all of the power and
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funding decisions with the board of 15 people do decisions going to law and do not go through congress, is that the best way to save it this entitlement and streamline spending? we believe there is a better way. we believe giving seniors a choice, like we did with party, is better. what it does at the end of the day is it shows providers that if you want to succeed, if you want business, you have to out compete for that business. the nucleus of the program we are trying to talk about is the beneficiary, not the board. there is the difference. we really believe, because of evidence and reality, that giving seniors more choices, more providers, doctors, hospitals, to what compete against each other for that business, it works. more importantly, you talk about what this would do it future seniors, we think we should give more money to low-income people,
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more income to six -- six people in the future of medicare. if we do this in a way like we're proposing, you do not have to do this for the current population. you did not need the board to start their indiscriminate price control in 2013. you do not have to affect benefits for people above 55 and cash flow that generation. this idea is to have bipartisan support. it came out of the clinton administration. it is a good and legitimate debate about growth rates and how you grow a payment and should it be g.d.p.. it is a very fair debate. at the end of the day, where i think we have the disagreement,
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but is we do not think we should invest all of the power and money decisions into the hands of 15 people were not even elected. purses' giving seniors the ultimate decision in controlling how their health care is to be delivered. if we just simply give 15 people the ability to unilaterally under paper writers and we see where this is headed, what will end up happening is the providers will just drop medicare. i do not know what you call that, but it is rationing using a different word. we will not paying anything close to what it costs to provide the service, so they will not provide the service. >> first of all, as you know, in the statute, it will not come into effect unless congress has not taken action. congress is in the driver's seat from day one. it's the spending trends are on target -- >> is supermajority to prevent
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that? >> only if congress has not superseded. if congress is paying attention to the bottom line of medicare, the board will be irrelevant coming up with a strategy and suggestions and it will never trigger. that is that one. i would also suggest, mr. chairman, when i think about medicare that i actually start with my dad was in the congress in 1965 on the energy and commerce committee and helped write law. he turned 90 in march and he is a happy beneficiary and relies on those services. if he were paying 51-70% of its costs, that is not a flexible and come that he would have available right now.
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i think that the notion of moving medicare from guaranteed benefits, to seniors and disabilities, you will have a benefit package that you can rely on going into the future. when you get sick, you well not go bankrupt. turning that over to private insurers and to an unelected group of federal employees who designed the benefit package and determine which benefit seniors will and will not get, i am not sure that keeps the promise that we made. i am all for booking for strategies to reduce costs and i would suggest that we have really never done that seriously until the affordable health care act. we have never had the tools particularly to look up the underlying costs. not just trimming off the top four providers, but really re- engineering the delivery of health care. a good number of health-care
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providers who i have visited with across the country say not only is it achievable but it is essential. they are well on the way to doing just that. >> i want to wrap up. i have been on ways and means for 12 years. i have watched as tried to reengineer medicare over and over again from republicans to democrats. it never ends up working. it is kind of a fatal conceit. we sit in washington and think we can figure out how to micromanage 17% of our economy and make this work. all we end up doing is artificial price controlled. that is what the 1997 budget agreement did and we have these providers going out of business. we put the money back. i do not see how this is not repeating itself. >> private insurers are then going to figure it out. >> we already have private insurers delivering and they have shown that they can do it
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cheaper, less than we expected. we already have private insurers providing medicare and advantage. but new contract out with private insurers to do part a. that is something we already have experience with. we also have experience with is if we simply under pay providers that they stop providing. we have experience with that, as well. at the end of the day, with a different opinion on how best to achieve this. my mom is on medicare. your dad is on medicare. they organize their lives around this program. let's leave that alone. the point is not to change that for them. we say do not do that, but in order to cash flow this commitment, we need to fix it for the next generation and we have a difference of opinion. with that, i will yield to mr. gramm -- van hollen.
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>> thank you, mr. chairman, and madame chairman -- and madame secretary, thank you for your testimony. i want to pick up on questions as they relate to cost shifting. that is exactly what the affordable care act addresses in many ways. when you have tens of millions of americans with no health insurance whatsoever and they show up at the hospital as their primary care provider, guess who pays? taxpayers and consumers through cost shifting. we have heard from the chairman about the fact that medicare gets a better deal in terms of the amount of payments to providers, which is reflected in part that the per-capita growth rates have been less in the private sector which is because they are able to use their
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bargaining power. what you're seeing with the affordable care act are people with no health insurance, not one penny. that was cost shifting. we were all paying in a big way. by creating an exchange that tens of millions of americans can create -- per dissipate, it means they are not showing up in the hospital. it is not only good for the health of those individuals and their families, but it is good for the pocketbooks of the rest of america. they were paying $0 to the doctor and $0 to the hospitals. now let's talk about another piece of cost shifting. if you pay doctors $0, you will shift costs. if you shift costs the way the republican plan does, you are not saving one penny for the system. you artist moving those costs on to seniors. i have the april 5th, 2011, cbo
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analysis of the republican budget plan. it says right here that under the proposal, most benefit care -- most medicare beneficiaries would pay more for their health care than if they participated in traditional medicare under either of cdo's long term some areas. the cbo estimated that in 2030, a typical 65 year-old would pay 65% of the benchmark compared 25% of the extended baseline scenario and 30% under the alternative fiscal scenario. i would point out again that is the flip of what members of congress get in terms of support and the so-called premium support. >> let me get through this and i will be happy to answer. that is the exact philippa. it is cost shifting. it does not save one penny.
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it will reduce the amount of support. madam secretary, i want you to expand upon another point here. the chairman mentioned that we already have some private insurance options within the medicare program. it is called medicare advantage. it is called medicare part c. the difference between the current system and the republican budget proposal is we allow medicare beneficiaries to choose whether they want to go into parts see or standard traditional medicare. the republican plans as there is no more choice. you are forced into the private plans. now, the chairman mentioned what he described as the benefits of this compensation. madam secretary, could you tell us what the rate that the medicare program was
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reimbursing the so-called "more efficient" medicare advantage plans opposed to the traditional plans before the affordable care act? >> the medicare and vantage plans were being paid at about 113% fee-for-service and the affordable care act directs that over time additional payment, which amounts to about $3.30 per month, per beneficiary. not for those who have selected it advantage but every beneficiary is paying that amount to keep medicare advantage at that artificially high level. over time, we are directed to reduce overpayments to put it more in line of medicare fee- for-service. we have begun that, and i would suggest that we anticipate a
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very robust program, but the overpayment is calculated by the congressional budget office to yield about $140 billion over the next 10 years. >> and people can choose currently to go down that road. they are not forced to go down there road, as the republican plan would do. they can choose to do so. as you pointed out, the medicare and the tax program was subsidizing those plans at 114% fee-for-service. not only were taxpayers paying more for individuals in that planter medicaid -- medicare, but other beneficiaries were cross-subsidizing those plans. is that correct? >> that is correct. there has been a pretty careful analysis of were there additional health benefits that were attributable to the
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additional expenditure and the answer is no. >> under medicare advantage, there is a wide range of ability to experiment witte co- pays, premiums, and many of the tools we are talking about. is that not the case? >> there is an opportunity, certainly, to experiment and develop different plan strategies. there are limitations on how much the costs can be shifted on to beneficiaries and particularly how much the plan design could be used to cherry pick among healthier seniors or sicker seniors. given those limitations, there's a lot of opportunity for innovative care strategies by the private market. >> now i just want to turn to medicare part d, the
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prescription drug plan, and ask you a key questions about that. it is the case that the expenditures came in under projection, if you read the medicare iactuary. the cost of prescription drugs in the overall market went down because of competition from generics. and fewer people are actually chose to enroll in medicare part d which had originally been projected which would of course bring down the costs. one of the features of the prescription drug bill when it was passed in 2005 was to deny the medicare program the ability to negotiate or bargain for drug pricing. the other thing that was changed was for people who were so- called "dual eligibles," medicare did not cover prescription drugs but medicaid
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individuals had gotten a better rebate, a better deal from a prescription drug companies than when those individuals also got a prescription drugs under medicare. that is money lost to the medicare program, is it not? reduced drug prices for the medicare programs represent savings that could be put into the medicare program and extend the solvency. is that not correct? >> that is correct. in most states around the country, the negotiations of drug prices, formularies, and rebates are something that most governors take seriously with the medicaid program. that is not a free-market the medicare program operate under. >> could we go to the fourth slide?
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we will have the medicare actuaries here tomorrow, but this is an interesting point that they made in their most recent report. it says, "the average annual increase in part d costs are expected to be greater than park a medicare or part before the period 2011-2020 -- of part b for the time of 2011-2020." the bargaining for the price of drugs is splintered into subgroups as opposed to being able to get a better deal for the whole group, like we do under the veterans administration. what this chart shows is that party is expected to grow more for beneficiaries and part a and b. could you comment on that? >> the trends, in part, are up
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because there are definitely some more expensive come but very significant, new drugs on the marketplace and that will continue to be a part of the free market. i also think that there are some tools we are still missing. i know in the chairman's home state of wisconsin that there is a senior care program that was negotiated and put into effect by the governor which is really popular by seniors in wisconsin. it's still operate as a stand- alone drug plan which can be a choice for those seniors. the cost that wisconsin seniors pay for care is significantly below what wisconsin seniors can choose from in medicare part d. we have a real-life example in the state where there is a state negotiated plan side-by-side
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with the part d will double choice plans and the cost are significantly different. >> i will wrap up with a few slides. this shows the projected cdo costs in 2030 recognizing the fact that the medicare program is able to negotiate better prices to bring down the cost. do you know what the average cost was for a senior in 1965 before repass the medicare program? the average cost for health care, the distribution of costs per senior compared to the government or other sources. >> it is miners demanding that the number of seniors have no health insurance at all. secondly, those that did have insurance, or some kind of
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coverage, were often paying about 65% of the wrong costs and that there were some payment for the remainder. >> so some had none at all and some had to bear the burden we would have to go back to under the republican proposal. if we could go back one more slide? these are the 2022 numbers, the double whammy about the fact that the seniors will go into the private insurance market, face higher costs, and get less support. immediately coming into the benefit she speaks about closing the prescription don not hold. this is the actuary showing -- donut hole. thank you, secretary. >> one perspective on the cost issues is that if you assume there are a number of seniors that are living on their social security checks, in 2022, the averages social security check will be a little over $21,000.
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that beneficiary, with the start of the republican congressional plan, would be paying 59% of their social security check on health care costs. that same beneficiary today pays about 26% of their social security check for health care. that will more than double the amount of their income would have to go to health care at your 1. >> one thing we failed miserably it is to learn how to manage the thermostat in this room. it is the south carolina temperature. >> mr. price? >> welcome, madam secretary. we appreciate you joining us.
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as you well know, we have spoken about the principles of health care being accessibility, affordability, and quality, the responsiveness of the system, and it traces for patience. many of us believe that the new law actually harms every single one of these principles. there is little trust between patients and people out there as it relates to health care, for a variety of reasons. former speaker pelosi said we had to pass the loss we knew what was in it. this advisory board and denial of care opportunity for the government is one of the things that we now know that is in there. it ought to be no surprise that there is little trust out there. i will remind you, madam secretary, that the original medicare legislation, "nothing in this title shall be construed to offer any officer or employee
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to have control over the practice of medicine or compensation of any officer providing health-care services." do you think we have violated that portion of the previous model kit -- previous medicare law? >> violated it by passing the medicare act? >> by having the government to determine what compensation would be provided for those caring for patients. >> medicare from day one determined but compensation they would pay for services, so i guess i am not sure. perhaps you are suggesting that since 1966 it has been a violation. >> that we violate the law and hence there is little trust.
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in the independent payment advisory board, this denial of care board, can only do that by denying payments to physicians. in recent op-ed you said, "seniors will have the confidence of knowing that the board will be in place to protect medicare for future generations." we talk about the recommendations that the board can make. are they able to reach different targets by raising revenue in the independent advisory board? candy and and it came advisory board raise premiums? >> as you know, it will be prohibited by law from cost shifting, premium increases, denying benefits. i think there are a number of examples of ways that they could have been effective at a much earlier time. one of them we just discussed which was the overpayment for medicare advantage.
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>> if i may? i do not get the time that the ranking chair and chairman get. the only way that the and independent advisory board would be able to affect what the physician does would be to deny payment for the provision of services. is that not correct? >> i do not think that is all correct. i think i could look out a lot of the underlying rising costs and recommend payment strategies that would much more closely align what doctors tell me they really want to do. >> all they can do is deny care or deny payment to the physician. >> i do not think that is the case, congressman and. >> i urge you to simply read the section. just read the section. if i may, this gets to the heart
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of the quality of health care and in this country. as a physician, i can tell you that if i am told by the government and i will not be paid for a service to a position, what happens in my presentation of the options to that patient, as the treating physician, is that i may be coerced by the government into not even presenting that option to the patient. this is as pernicious as it could be in terms of the federal government getting involved in the provision of a care to a patient which violates the trust that is so important between patients and physicians. that is why we on this side of the aisle, and some on the other, feel so strongly that to have a denial of care board in place in federal law is simply a violation of american principles as it relates to health care. >> congressman, i hear what you are saying and i would suggest
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that the republican budget proposal which would eliminate guaranteed benefits for which there -- >> you know that is not true. our proposal guarantees the provision of care for seniors. >> let's leave it at that. that is your time. >> thank you. we will continue this conversation somewhat. this is important for us to be talking about, one of the big contrasts. a big contrast talking about the future of medicare is talking about what passed last year, which is now out law, the work of implementing the affordable care act and strengthening medicare and getting the best value for money. i want you to talk about that.
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but before we get there, understand the choice that is being presented, contrast with the republican plan. we used to call at the rye and plan, but now that all the republicans voted for it, it is the republican plan. this is what the majority of republicans want to do, which is to end medicare as we know it, offer seniors a voucher to shop and the private marketplace, which as you pointed out, is more expensive, and it has -- and it does not have the same concerns about cost because they raise the premiums. about $6,000 per year per senior, starting, per year, going up, doubling up, who knows in the future. the caution is directly to the seniors, with no protection for the seniors, no consumer
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protection, no guarantees on benefits, and really offering options. they can choose between expensive plans or plants that don't have all the benefits they can afford. this is what we don't want to see happen. and contrast to the republican colleagues who say there is no trust in medicare, most americans and most seniors like medicare and want to see it continue. and so do we. what i think is particularly interesting about your testimony in this hearing is the very keen focused for seniors about strengthening the benefits and getting better value for the dollars. we know we can do better in delivery of care. i actually care a lot about my husband and son and daughter-in- law and many of the physicians and hospitals that i know. they know they can do better. that would like that flexibility
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and the tools and the innovation to do that. the affordable care act, we emphasize primary-care, pay them better under medicare and medicaid. we wanted to give physicians and hospitals will flexibility in redesigning better coordinated care for seniors in this country in order to provide better care, improve their health, and their outcomes, and to save taxpayer dollars. i want you to give all of that up, to repeal that act as the republicans want to come and replace it with a voucher that seniors could use in the private marketplace that unfortunately has not taken these kind of innovative actions the way they might have, but they may well do it in cooperation with what medicare is doing. could you elaborate on the cost savings, the potential cost savings based on the experience we have already had and the good
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work you are doing now in the innovation center with the accountable care organizations and patient-centered medicare -- medical homes, with the reduction in hospital infections and admissions. at the opportunity, i understand, is in the hundreds of billions of dollars in savings. what better way to use that than to reinvest and keep medicare strong. >> you are absolutely right, and i think we have to started down the path, in addition to the innovations, and i will talk about those. i think the new tools that congress gave us and directed us to use for fraud and abuse are unprecedented, and i think that can also yield significant dollar savings. we just started predictive modeling, a computer effort, and
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i guarantee you it is going to be very impressive in terms of results. but the innovation center is just watching some of the strategies. the partnership for patients we have talked about. it is aimed at simple goals to start with. that is about $50 billion that is, according to the cbo, a conservative estimate, if we get more people to participate, lowering hospital infections and preventable readmission. that not only helps people in the medicare system but anybody who goes into the hospital. if there are fewer infections and a hospital, it will help private employers, it will help everyone. a>> anything is possible, thinking. -- thank you. >> thank you, mr. chairman, and thank you, madam secretary, for being here.
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i want to talk about the progress of ipab. cms is required to be targeting the savings. " what promise have you made towards setting up ipab as a functioning agency? >> that work has not started. i think the president is consulting with people about possible candidates for the ipab board, but there is no setting up an agency before there is a board appointed. >> are there any qualifications to be sitting on the board? >> yes, the statute lays out a series of areas of expertise, which the board has come a very similar to medpac, health care providers, health economists, consumer advocates, people experienced with help finance. a key difference between the board qualifications for ipab
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and for medpac are no conflicts of interest if they are to be an appointed member of the independent payment advisory board. it must be a full-time assignment and not be an active user of this system or receive payments from the system. >> so it will be a full-time job? >> that is with the statute is written. >> any idea of the salaries? >> i think it is the same -- i know it is equivalent of a federal salary, $160,000? i don't know. but it is a level that is a federal -- identified as a federal judge, i don't really know, i am sorry. i can give you that answer. >> can you explain it if the plan fully implemented would make it so that cancer patients would die sooner? would it lower quality of care by cutting provider payment and
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half the patients, to cause patients to die sooner? >> congressman, i think i was at a hearing where i was asked what happens if somebody runs out of money and a voucher in the midst of a chemotherapy program, and i said, frankly, there are not a lot of options. charity care is one, donated care, where they stopped taking cancer therapy. >> my granddad just passed away, and i have seen how medicare worked for him. the average couple turned 55 today paid over 109,000 others into medicare over their lifetimes, but they will receive over $343,000 in benefits. as a 34-year-old, and many others who are not even close to the age of 65, will i get the same deal? >> i think it depends on what congress decides to do with medicare in the future. >> could i get the same deal?
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at the current level, if we sit -- if we stick with the current plan of doing nothing, could i get the same deal? >> no one has suggested doing nothing, congressman. i think the affordable care act actually took a major step, for the first time ever, in entitlement reforms and gave us tools at the centers for medicare and medicaid services to finally aligned payments with high-quality, low-cost care delivery, and we're trying to accelerate that pace. >> what i don't understand it is, what the affordable health care plan did was address insurance. >> that is not true, it addresses insurance but also the care delivery, the underlying system, in addition to insurance. >> do you believe that health care costs will start declining? there currently roughly three times the rate of inflation. >> there are right now running
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lower than inflation. the strategies are effective where you focus more on preventive care and early intervention, or people are healthier as they get to be 60 and 70, you can dramatically improve health care costs, as well as some of the care stood jeez aimed at delivering more patient-centered care out of hospital systems, keeping people in their homes longer, which is what people say they want, and also with a lot of providers would like to do. but right now, the alignment of the payment incentive and the care delivery are not there. >> i think with these numbers, it is $109,000 covers $343,000 of benefits, americans understand this is not going to be sustainable. >> i would agree, and everybody agrees. >> that takes big changes. >> yes. >> thank you. i yield back. touch aike to briefly
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few things. as i listen to my good friend the chairman described certain things, i wondered if we were talking about the same bill. certainly we're talking about a very different bill then i heard him talk about. my understanding is that you testified that the provisions here are not triggered by the ipab unless and until congress does not deal with escalating costs in medicare. is that correct? >> that is correct. >> and if we fail to act, don't get a spinal implant, then they can make recommendations, and it says right here, it's not rationing, but in terms of helping and delivery mechanisms. but those go into effect only if congress has the ability to
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overturn those provisions. is that not correct? >> that is correct. >> that is the bill you why reading? >> that is the law. >> i listened to what my good friend of georgia talked about, which sort of sound like a fantasy land. he was concerned that medicare over the years has had provisions about medicare reimbursement. my good friend as a private physician and dealing with private insurance, you are knowledgeable about this, do physicians willy-nilly submit anything that they want an insurance companies just pay every provision, every condition, every treatment? >> the rates are negotiated and the benefits are spelled out. >> do insurance companies push back and deny claims? >> regulate. >> they do? >> yes, sir. >> i thought that was the case. what we are talking about here is simply being able to have the
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same sort of provisions that happen in the private sector, except my friends of the republican side would turn this all over two insurance companies to do the rationing, the denial, the approval, and seniors navigate on the rhone. -- on their own. that is a statement. you don't have to answer that. i heard you take my good friend mr. ryan's point that somehow the three had a $73 billion cost, which represents less than what was projected, -- that somehow the $373 billion cost, which represents less than that was projected, and he started to talk about other ways to do it. i think it is a very serious question. yourd you have some of certified smart people calculate for us what would have been the cost in 2030 if we just gave our
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senior citizens the same deal that the veterans get? >> we could do that, sir. >> i suspect it is quite a bit less than $373 billion that my friend is so excited about. would you think might be less than the veterans than what was negotiated? >> i think it is substantially less, yes, sir. >> i think it would be good to get those numbers. again, i am concerned that we are talking about a fantasy world where insurance companies don't make decisions denying benefits, don't ration care, don't cut people off, that somehow because the prescription medicare drug program, and funded, it was sort of launched -- unfunded, it was sort of launched, that somehow that is a
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triumph of free market economics when, in fact, we could produce much lower costs with the systems the government has and that we have an actual experiment about the cost effectiveness of this approach with the medicare advantage. i am old enough to remember when medicare advantage was advanced, because it was going to save money. it was going to be 5% less. a 95% on the dollar was the projection. and because the system was game or through it inefficiencies, it has been 13% more expensive and until recently because of the changes in place to bring it under control. and all the while, seniors are paying a premium. what did you say the extra cost was? >> i think it is $3.30 per month per beneficiary, and there are about 49 million beneficiaries.
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>> thank you very much. >> it is my understanding the secretary has to go in 10 minutes. we will start with the members who did not have the opportunity to go yet to be at the top of the next panel. >> madam secretary, thank you for being here today. i know it is not the most fun thing. >> it is the warmest. >> under the affordable health care act, i think i understood that we cannot deny care, is that correct? >> the independent payment advisory board -- >> under the affordable health care act, the denial of coverage is protected by law. you cannot deny coverage, is that correct? and i get to keep my insurance company and get to keep my doctor and i cannot be denied coverage and things like this? >> essentially, in 2014, when
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they health exchange is set up, you will have the ability to come into the market without pre-existing health conditions, yes. >> and once i am in that market, health insurance cannot be denied to me if i get sick? >> that is correct, cannot be dropped. provisions are against companies dropping a beneficiary because they made a technical error or got sick. you cannot have that. >> and that is done through private insurance companies? >> that is correct. >> private insurance companies cannot be denied coverage, and if they get sick, they get to keep it? >> i think a big change is that the cost sharing is shifted to seniors and those with disabilities under the republican plan. the rea is no plan for underlying -- there is no plan for underlying delivery services, and i have no idea
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what the benefit package looks like. maybe there has been discussion, but i have not seen what the $8,000 voucher would purchase in the marketplace. >> since we cannot see all of that yet, it seems a little disingenuous for my colleagues on the other side of the aisle and members of the administration to project all of these salacious claims about the plan since we have not yet seen it. >> we are projecting costs, and that is not us, it is the cbo. it says that at a senior would be paying 61% of their costs in year one and closer to 70% by year eight. that is the cbo. >> and it shows a large high cost. >> will the gentleman yield on that? >> we asked the cbo about that and they say they cannot estimate cost and competition
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just yet. >> take a look at medicare lookd, -- they can look at medicare part d and medicare advantage. >> look at medicare part d and the savings, and they did not replicate that in their cost estimates, they just ignored it. >> thank you for the clarification. madam secretary, during the testimony today regarding ipab, you said a written testimony and comments they are prohibited from cost-shifting, premium- shifting, payment denial, rationing care, reducing benefits, changing eligibility. i think he mentioned they will be paid something for the work, you don't know how much, you call them a backstop. if they cannot do any of these things, what are they back stopping? >> let me give two examples of the kinds of things that if they had been enacted sooner we could
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have saved billions. we just discussed medicare advantage, the overpayment that has gone on for decades. actually, the medpac group of the advisers has recommended looking at that strategy, lowering it for years. that has never happened. the other thing that has recently happened, and again congress started down this path as long ago as 2003, is our recent experience with competitive bidding for durable medical equipment. it started in 2003, jumpstart and to the snake, with drawn again. this year we have implemented saving 32% of the cost of last year for durable medical equipment. there is no change in beneficiary benefits. they're getting the services they need, but at one-third the cost. i think those are two recommendations that could yield
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billions of dollars. >> thank you very much. i will yield back. >> thank you, mr. chairman. secretary sebelius, nice to see you again. i want to talk about competition and the effect of competition, as it relates to health care. potential for competition to reduce cost depend on a fully informed, fully free negotiation on both sides? >> usually that is what a market strategy is. >> and with regard to medicare part d, i think virtually everyone had the same experience i did, that my constituents for a long time were extremely confused, and many are still confused about what their
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choices are under the prescription drug program. is that likely, assuming we were to enact the republican proposal, that this would be an enormous problem for america's seniors, to be in a position to intelligently repeat what the insurance companies approach to marketing is? >> what we have done in the past two years, and some of the medicare part b programs, and medicare advantage, is try to eliminate programs that have very little differential but just add more confusion to the marketplace, to do just that. yes, i think it is not un- complicated. we used to run a senior medicare counseling program, and many people want to make the best choices. often though they would find
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themselves in a program, the drug regimen would change and that program, only to find out that the drugs that they need have actually shifted out of the program. that is a fairly common phenomenon for seniors. >> you had benefits for hospitalization, physician choice, home health care, medical equipment, and potentially hospice and who knows what else, it makes it even more complicated for a senior to go through, or his or her family? >> i definitely think there is a huge ongoing effort to educate folks about what the benefits are and how to take the best advantage of them. one of the points we have not really touched on, but i want to mention, is just the additional cost of administration. most insurance companies, even the most efficient, run at about 11%-30%, some as high as 25%.
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-- 11%-13%, some as high as 25%. medicare has to% or less administrative cost. whatever that fixed contribution can buy and health benefits, less is going to pay for health services in the private market than in the public market. >> granted, the republican proposal has not been put into legislative language that we could look at, but if you consider the statements that have been made from the other side, that nobody can be turned down or be denied service or deny choice of physician, under the republican plan, do those stipulations make it much more difficult for insurance companies to actually lower costs? >> again, insurance companies, to my knowledge, have a network of doctors. they accept some and deny some
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on a regular basis. they negotiate with hospitals. some are and, some are out. that is part of the strategy to put the plan together. when you buy that insurance, you are buying basically that network, that hospital system, that group of providers. i think it is a different system than medicare currently, which says to a patient, you can choose any doctor that you want. if you don't like this doctor, you can go to a different doctor. that is not the strategy around private insurance. >> i guess what i was trying to get at, judging from the other side about the republican proposal, is it likely that they could have a significant impact on overall cost to the system if they cannot deny care, they cannot deny anyone coverage, and they have to provide all the services that medicare provides? >> if you assume that insurance
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is about selling a product that delivers health care, pays providers, pays hospitals, doctors, there are only a limited number of ways that you can reduce cost. you can reduce administrative cost. you can negotiate better prices with all the pares and providers, which is reducing cost. you can aim at better health strategy, which i think can be effective, get a health care population. in the private market correctly, that is done by cherry picking, ticking health care people and providing people who walk -- taking health care people and providing -- and nine people who are sicker. or you can't shift cost. i would say both the medicare and medicaid proposals that passed the house shift costs onto seniors, those with disabilities, on to the states. >> thank you.
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madam secretary, i wish we had more time to get into all of this. i obviously have a strong opinion about what your doing, but this is an issue that we will have to get into a much more detail. that affects nothing more than the health security of our nation's seniors. we have a strong difference of opinion on who ought to be in charge of their health care, them or this board. i wish we had more time to get into it. the members who have not had the opportunity to ask will be front of the line the next panel. with that, madam secretary, i know it was a hot morning. thank you for your indulgence. i appreciate it, and i hope we can do this again. >> thank you, mr. chairman. >> looking into the conference room and salt lake city where we will have live coverage of the national governors' association summer meeting, led by jan borrower of arizona and martin
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o'malley of maryland. it will be talking about the security of borders and communities, and this is scheduled to get underway in just a few minutes. meantime, tomorrow on "newsmakers," we will talk about how governor's view the national debate over raising the debt ceiling, the dispute and the legislatures in wisconsin and minnesota, and some of the challenges of being a governor during a recession. >> the biggest concern is the longer this is delayed and the more an action we see out of washington, d.c., the more concerned because this to our own economies. i am a sales tax state. consumer confidence and business confidence is key to my economy. you can imagine my consumer confidence is down, i am not getting revenue, and it is
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hurting the state coffers. i know i have seen good signs in my business community, but a number of them have not been willing, despite the fact they have money, have not been willing to hire simply because of the uncertainty what is going on in washington. that is really a direct impact on the states, and it is not just my state. >> watch the entire interview with christine gregoire, tomorrow at 10:00 a.m. and 6:00 p.m. eastern on c-span. we go live now to the governor's sec action for the meeting led by gov. jan brewer of arizona and governor martin o'malley of maryland. please see her if you need copies of any of the material or any other assistance. heather is

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